The Canadian dollar jumped after May CPI hit the highest rate in eight years. The Canadian dollar trailed AUD and NZD despite the miss as Canadian bank economists held onto predictions of no hike at the July 19 meeting. Some continue to forecast no hikes this year, noting gas prices have been down since the report. As traders, we think the money lies in establishing longs ahead of the decision at an opportune time. First, the BOC is hyper-conscious of inflation expectations (like Trichet) and terrified of allowing them to creep up at all. Second, it’s an unpredictable central bank and will not foreshadow a hike with a code word like “strong vigilance.” Third, there is no meeting in August, so the BOC will have to wait until Sept. 7 to move and policymakers may feel that they will sleep better through the summer holidays with a pre-emptive move. The clincher may come with Thursday’s report on April GDP; a 0.1% contraction is expected. With a flat or positive reading you will see the stubborn Canadian bank economists begin to shift their tone.