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Poloz Creates Volatility in USD/CAD; US Tax Bill Faces Fresh Resistance

Published December 15, 2017
  • Comments from Bank of Canada Governor Stephen Poloz created a volatile USD/CAD rate yesterday as the BoC head offered conflicting opinions in two separate speeches.
  • The loonie strengthened into the low 1.2700’s after Poloz mentioned that he was “increasingly confident” that less economic stimulus was needed for the Canadian economy, however, Poloz tempered the loonie’s strength later that day during a CNBC interview where he stated that Canadian economy had excess capacity and that he would like to see the economy “run hotter”
  • Month-on-month change in Canadian manufacturing sales fell to -0.4% versus growth expectations of 0.9%. The US Empire State Manufacturing Index (a survey for New York State manufactures gauging general level of business conditions) came in at 18.0, slightly below expectations but still generally positive.
  • The US tax bill faces fresh challenges as Republican Senators Marco Rubio and Mike Lee said they would vote against the bill in its current state unless there are changes made to child tax credits; the US dollar is under sustained pressure due to these hurdles in the tax overhaul process.
  • US President Donald Trump is encouraging both the House and the Senate to have the bill finalized before December 25; Republicans are hoping for a compromise later today to ensure final voting can commence early next week.
  • Oil prices showed tepid growth of 0.1% this week as investors look towards weekly data on US oil output; prices were supported throughout the week by a pipeline outage between the North Sea and Britain.