BoC: a very hawkish outlook in the market - Nomura

Analysts at Nomura explained that market pricing for a July Bank of Canada (BoC) rate hike and a follow-up move later in the year has jumped up. 

Key Quotes:

"Our base case is for the BoC to hike in July. But given the skew in expectations, CAD reaction could be asymmetric. 

The BoC has surprised in the past, and in our view, the probability of no change in July and waiting until October to lift rates is higher than currently implied by the market. 

We close our USD/CAD put spread trade, locking in a 5.26 times return based on our 0.41% entry cost and tactically initiate a riskreward based long USD/CAD spot position over the event."