BoC likely to keep rates unchanged

The effects of low oil prices are still being felt on Canadian economy, which officially slid into recession in Q2. Despite decent behavior of consumption and a still-resilient labor market, which will likely be highlighted by the BoC, there are significant downside risks to economic activity. 

"Canadian oil producers face very high extraction costs, and tight margins due to low oil prices will likely continue to slow capital expenditure, hurting aggregate investment even further. The BoC will likely highlight the brighter side of the picture, and it is expected to keep its overnight lending rate unchanged at 0.5%", says Barclays. 

Continued weakness in the energy sector has depressed investment, which is expected to remain subdued for the rest of the year. Weakness is expected in the price of commodities as nervousness about China dominates the price action.

"However, further monetary easing will be needed in the near future, and another cut is expected before year-end. With no other major data releases, the looney should remain range-bound, with downside risks due to oil price movements and concerns about the global outlook", added Barclays.