September BoC: Don't rock the boat

"The BoC left rates unchanged at 1.50%, as was widely expected," TD Securities analysts note.

Key quotes

"The economy has been evolving in line with the Bank's forecast from July and the communique noted that the housing market had shown signs of stability, which gave the announcement a fairly constructive tone. Concerns over NAFTA did temper the message somewhat, but for the moment at least the BoC is not giving trade uncertainty undue importance."

"The forward looking language was largely unchanged, with the Bank stating that rates were expected to move gradually higher, guided by incoming data. We look for the next hike in October. Rates: Rates markets took a dovish cue from the continued emphasis on gradual. While the statement keeps October in play, this is limited language arguing for a more aggressive stance thereafter. We remain biased toward flatteners in the short end."

"FX: The language sets up the Bank for a hike at the next meeting but we think that the market has priced in much of this already; USDCAD should continue to trade in the 1.30 to 1.35 range, suggesting to establish fresh longs towards the lower end of the range."