Canada faces a mix of headwinds and opportunities as it navigates an uncertain near‑term outlook with job growth showing signs of stalling, commodity markets ricocheting and trade policy evolving. BMO Canadian Rates and Macro Strategist Benjamin Reitzes spoke to Cheryl Ferguson, Managing Director in Global Markets, for her new podcast series The Hedge Report where he shared insights in the inaugural episode around several dynamics that could shape the Canadian market in the months ahead.

Trade is the main risk for Canada but there’s downside and upside to that. In the near term, the country will have to navigate more uncertainty that will likely push interest rates lower. However, if trade suddenly became more certain, then the outlook for the Canadian economy would look a lot better. You have this prolonged uncertainty around trade policy that's been hanging over Canada for over a year. However, if trade uncertainty eases, it could improve economic confidence.

Despite whipsawing prices, the trajectory for precious metals, oil and other commodities is still on the up and a return to previous lows is unlikely. That rise is helping the Canadian dollar, and I see continued currency strength over the next one to two years.

I think investors are increasingly scanning the market and taking every dollar they plan to allocate and looking at how they can diversify. Canada is a country that can benefit from that with a rising currency. We are a sliver of global asset allocation, so even if an extra penny of every dollar comes into Canada, that's a meaningful sum of money for us and could have a noticeable market impact.

Prime Minister Mark Carney has made pushing forward nation-building infrastructure projects one of his key goals. If he can announce concrete steps towards any of those generational investments, that could be a constructive development for Canada. It would likely mean somewhat higher rates and that the economy would need a little less support from the Bank of Canada due to higher potential growth. However, I caution that it’s not a base case as these projects do generally take years. But it’s something that’s possible.

To hear more of Benjamin’s thoughts on rates, listen to his podcast here and his guest appearance on Chery’s podcast: The Hedge Report: Where Are Rates Headed?