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TD Securities strategist Robert Both suggests that the Bank of Canada is likely to maintain a cautious stance on monetary policy even if a trade tariff agreement is successfully negotiated. The central bank requires more comprehensive economic data to properly assess how reduced tariffs might impact trade balances, national exports, and overall economic output. Key trade figures that could inform this perspective will not be accessible until November. This cautious outlook indicates that foreign exchange markets should not immediately price in aggressive rate hikes following any positive trade news. For currency traders, the Canadian dollar may experience limited upside from trade headlines alone, as interest rate expectations remain anchored by the central bank's patient approach. Moving forward, investors should focus on upcoming trade balance releases and economic activity indicators coming out of Canada. Until clear evidence of sustained economic acceleration emerges, the Bank of Canada is anticipated to keep interest rates steady, making upcoming macro data critical for CAD pricing.
