The CAD was on a collision course only minutes after BoC Governor Poloz indicated that policy makers were taking a step back from their hawkish rhetoric that has been in play ever since the BoE’s Carney was at the helm.
The USD is ending the week beating back a wall of loonie buyers. The BoC’s decision to drop its tightening bias earlier in the week has crippled somewhat the CAD outright, and this despite commodity prices getting a leg up on a vulnerable US dollar.
The BoC surprised the market mid-week by dropping the “conditional tightening bias” that had been in-play for nearly 18-months. However, changing its stance and being vocal is not a perquisite for the central bank to be cutting rates any time soon – the bar for lower rates seems to set in stone and would require a lot more warning signals from the Canadian economy for that to occur.
Be forewarned, the negative macro factors are beginning to stack up (Canadian growth issues, commodity prices, China’s hard landing) and will be used to push the loonie lower in the short-term. Any ad-libbing on global growth usually has a direct impact on the commodity growth sensitive currency.
Despite consolidation and appreciation tending to usually be the order of the day – the market is now looking towards further fundamental weakness now that the CAD is closing out the week on its lows outright, extending its recent decline as fears of possible monetary tightening in China put pressure on commodity-linked currencies.
Error: File “FX_AMERICASAnalysis_2013_10–25.txt” does not exist at this path
- US Consumer Sentiment Drops in October –
- US Durable Good Fall in September –
- US Spying Debate Heats Up in Europe –
- U.S. Dollar Struggles –
- US Fed Unveils Tougher Liquidity Plan –
- US Manufacturing Slows Down Hit by Shutdown –
- US Trade Deficit Grows on Weak Exports –
- U.S. Dollar Struggles –
- Bank of Canada Holds Rate at 1 Percent –
- Carney Looking to Cost Cutting at BOE –
- Disappointing Jobs Report will Likely Delay Fed Taper –
- U.S. Shutdown may have Cost 120,000 Jobs –
- US Futures Hints at Fed 2015 Rate Hike –
- Existing U.S. Home Sales fall in September –
- Auto Industry to Invest 10 Billion in Mexico –
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.