The Bank of Canada (BoC) is widely expected to keep its policy rate steady at 2.25% today, as cautious policymakers weigh global uncertainties, USMCA renegotiation in 2026, and part-time driven job gains, leaving the CAD vulnerable to near-term weakness, ING's FX analyst Chris Turner notes.

Caution prevails ahead of USMCA talks and part-time job gains

"The BoC meets today to set interest rates. The policy rate is unanimously expected to be left at 2.25%. The meeting comes at a time of hawkish global re-pricing – led largely by Australia. In fact, money markets now price in 30bp of BoC hikes by October next year."

"In its September monetary policy report, the BoC took one of the dimmer views of the global economy. And we think the fact that Canada is subject to a USMCA renegotiation in 2026 leaves policymakers cautious – even though there is supportive government fiscal stimulus. Additionally, a lot of the strong recent job numbers in Canada have been driven by part-time, not full-time employment."

"It thus looks too early for the BoC to sanction 2026 rate hikes, and we see downside risks to the CAD today."