BOC on WatchAll eyes are on the Bank of Canada today as Tiff Macklem and co prepare to unveil their June rate decision. The bank has been giving strong easing signals recently and with inflation falling and most economic indicators weakening, conditions appear ripe for a cut with market consensus projecting a .25% reduction today. Interesting to note that while Bloomberg and Reuters surveys ahead of the event have found respondents in favour of expecting a cut today, Canada’s six biggest banks remain split with some expecting that the bank will hold for that last piece of certainty over inflation before cutting in July. BOC/ Fed DivergenceThe other issue for the BOC is that the Fed is not expected to cut rates until at least September meaning that a cut today puts the BOC well ahead. Macklem has recently warned that there are limits to how much the BOC and Fed can diverge given that a weaker CAD pushes up import prices and can spark a fresh rise in inflation. Risks of a Further HoldGiven the importance in getting timing right and the risks of cutting too soon, the BOC might opt to hold today, allowing for some extra confirmation on CPI and narrowing the gap with the expected September Fed rate cut. If seen, CAD should remain supported today while a cut would likely see the currency heavily sold, dependent on the guidance offered. Technical Views USDCADFor now, USDCAD remains tied to the 1.3683 level, still sitting within the corrective bear channel from YTD highs. If we break higher here, 1.3829 will be the next resistance to note. To the downside, 1.3501 and the bear channel lows will be key support to watch. 
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