Expect a Hold from the BOC | Markets Await Powell Testimony
Published July 10, 2019
The recent strength in Canadian economic data is providing the Bank of Canada the prospect of resisting any dovish turns in monetary policy. Policy makers are expected to keep the benchmark overnight rate at 1.75% in a decision at 10am EST in Ottawa. This marks a sixth straight pause by the central bank since it last raised borrowing costs in October.
The congressional testimony of Federal Reserve Chair Jerome Powell will be closely watched by market participants today. There has been a significant shift in outlook, as the stronger than expected Non-Farm Payrolls report on Friday demonstrated. Treasury yields and the greenback have jumped higher as markets rush to scale back pricing for potential rate cuts from the FOMC.
French industrial output has surged, indicating that the euro area’s second-largest economy has resisted a downturn in manufacturing in May. Current output increased by 1.6% in manufacturing as well as by 2.1% across the whole industry.
The UK economy rebounded in May as car factories resumed work following Brexit-related shutdowns. GDP rose 0.3% after a decline in the previous month, The Office for National Statistics published earlier this morning. Rolling three-month growth slowed for the second consecutive month after growth of 0.5% in Q1 of this year.