USD/CAD faces potential upside as BBH analysts challenge the market's aggressive 78% pricing for a 25 bps Bank of Canada rate hike scheduled for October 28.
Brown Brothers Harriman suggests that the current market pricing for a 25 basis point Bank of Canada rate hike is overly aggressive. As the market has priced in a 78% probability of a hike to 2.50% on October 28, any deviation from these expectations could lead to CAD weakness and subsequent upside for the USD/CAD pair.
Swaps are currently pricing in a 78% probability of a 25 basis point rate hike to 2.50%.
BBH views the market's aggressive pricing for a BoC rate hike as excessive, suggesting that the CAD may weaken if the central bank fails to meet these high expectations.
Brown Brothers Harriman analysts suggest current market pricing for a 25 basis point Bank of Canada rate hike is overly aggressive. The pair trades near one-month lows as investors weigh the 78% probability of a move to 2.50% on October 28.
The pair is under pressure as markets aggressively price in a 25 basis point rate hike from the Bank of Canada, which is currently expected to occur on October 28.