RBC's View
Conditions in the economy have evolved generally in accordance with the central bank's expectations, RBC's Alvin Tan wrote in a note.
We continue to expect the first rate hike in April of next year, and the BoC to reiterate that, barring significant additional disruptions from the new virus variant, the economy is on track to fully recover by mid-2022 to look through the rather volatile LFS data release, so the broad dollar tone will call the shots for the CAD.
ING's View
Following the introduction of the Omicron COVID strain, the Bank of Canada will walk gingerly at its policy meeting on Wednesday but the Canadian currency will show little reaction, according to ING.
A cautious BoC strategy due to uncertainties about the economic impact of Omicron would not surprise the market and would not harm CAD as long as officials signalled they would stick to their policy objective, according to ING analysts. The threshold for a "hawkish surprise" appears to be high, as the market anticipates five interest rate hikes next year, they argue. According to them, the meeting will have only a minor impact on CAD, leaving the currency purely dependent on external forces.