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Dovish Bank of Canada Forces CAD Down

Published January 19, 2017
  • The Canadian dollar suffered severe losses against the US dollar after yesterday’s Bank of Canada conference with Governor Stephen Poloz; CAD lost nearly 2 percent against USD since yesterday and reached as high as 1.3323 USD/CAD this morning
  • Poloz adopted a cautious tone with special attention to inflation and significant slack in labour markets with material excess capacity in the Canadian economy; also mentioned uncertainty of changing American monetary policy and fiscal growth
  • Data on Canadian month-on-month Manufacturing Sales improved greatly this morning; US Building Permits, Unemployment and Manufacturing Data also showed better than expected numbers
  • Speaking in San Francisco yesterday, Janet Yellen offered fairly hawkish comments in stating the US was in for a “nasty surprise” if the Fed waited too long to raise interest rates again; Yellen will speak again today at 8:00 PM EST
  • Oil is up 1 percent this morning in anticipation of new weekly information on US stockpiles of crude and refined products to be released at 11:00 AM EST
  • The European Central Bank left the minimum bid rate unchanged at 0 percent and bank overnight deposit rates the same at -.40 percent; Draghi commented that the ECB sees no convincing upward trend in underlying inflation
  • Market participants keenly await Chinese GDP and Industrial Production data release at 9:00 PM EST tonight

Charts (1) USD/CAD Begins to Retrace Losses