TSX futures edge up as investors brace for Bank of Canada rate decision

On Monday, the TSX futures edged up, bouncing back from a significant drop on Friday, as investors anticipated the Bank of Canada's (BOC) interest rate decision later in the week. The S&P/TSX Composite Index futures climbed 0.2%, reaching 2,147.10 points. This rise came after a 0.76% decline for the main index on Friday, triggered by a decline in gold futures and a drop across various sectors such as materials, clean technology, and technology shares. Implied volatility also increased, with the S&P/TSX 60 VIX rising 0.91% to 13.24.

The main focus for Canadian financial markets this week is the BOC's interest rate announcement on Wednesday, where analysts expect the central bank to maintain the benchmark policy rate at 2.25% for a seventh consecutive meeting. Despite trade tensions between Washington and Ottawa potentially affecting Canada's economic growth, core inflation staying close to the central bank's 2% target gives policymakers room to avoid a rate cut.

The BOC had stated that if U.S. trade restrictions significantly hurt Canadian economic activity, further rate cuts could be used to support growth. However, a strong labor market, with the August labor force survey expected to show a 15,000 job increase on Friday and the unemployment rate remaining at a two-year low of 6.4%, suggests that an immediate rate cut is unlikely.

Energy stocks on the TSX are expected to benefit from a recent surge in oil prices, which rose nearly 3% to above $90 a barrel following military strikes in the Middle East. This increase in energy prices provides a cushion for Toronto-listed energy producers, who had lower crude prices on Friday.