TSX futures edge up as crude rally offsets mining drag ahead of BoC decision

Canada's major stock index futures climbed 0.5% to 2,117.80 points on Tuesday, amid a recent rise in crude oil prices and mounting tensions in the Middle East, as investors awaited the Bank of Canada's decision on interest rates. Monday saw the index fall 0.78% due to declining sales in resource, real estate, and tech sectors. The Bank of Canada's meeting on Wednesday is expected to keep the target overnight rate at 2.25%, a seventh consecutive time, as policymakers seem to favor the current inflationary environment near the 2% target.

Despite the looming trade conflict with the U.S., inflation remains low, giving the Bank room to maintain rates to bolster economic activity. Financial analysts have projected around 75 basis points of rate hikes over the next year, with many viewing this as excessive due to trade disputes. This suggests a potential shift towards a more dovish stance, which could lead to a weaker Canadian dollar nearing the 1.4000 per U.S. dollar level.

The Bank of Canada has suggested that substantial new U.S. trade barriers might prompt further rate cuts to protect domestic growth. However, positive employment data could complicate this, with the August labor force report expected to reveal a job addition of 15,000 and unemployment at a two-year low of 6.4%.