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Bank of Canada Leaves Overnight Rate Unchanged, USD/CAD Reaches 2-Week High
Published December 7, 2017
As expected, the Bank of Canada stayed par for the course yesterday with regards to its monetary policy; the BOC highlighted good economic performance and the job market, but expressed caution by noting that excess capacity remains.
We saw the greenback strengthen to its highest level in two weeks against the loonie today, reaching as high as 1.2859 despite greater than forecast building permits data out of Canada. Cautious optimism on US tax legislation and upbeat US private sector employment data (released yesterday) provided some support to the dollar.
Oil prices rose modestly today; investors are wary of pushing the market lower after an unexpectedly large rise in US stockpiles of refined products has increased concern about the demand outlook. Although prices rose today, they are still near three-week lows. Brent Crude is up ~0.7% on the day, trading at 61.63, while WTI Crude is up ~0.5% on the day, trading at 56.25, at time of writing.
Investors will be looking ahead to tomorrow’s non-farm payrolls report (8:30AM EST), which will be the last employment report before the Federal Reserve’s monetary policy meeting next week. The US central bank is widely expected to raise interest rates following its meeting on December 13. Markets, however, appeared doubtful over the central bank’s ability to raise rates as much as it would like next year due to concern over the sluggish inflation outlook.