There’s been a swift move lower in the Canadian dollar in recent trade after the latest rate decision from the Bank of Canada. Unsurprisingly the overnight rate was left at 1.75% but the market reaction can be explained by some dovish shifts in the statement. The following are excerpts:
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Resilience will be increasingly tested as trade conflicts and uncertainty persist
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Consumer spending choppy but will be supported b income growth
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2019 growth forecast 1.5% from 1.3%
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2020 growth forecast 1.7% from 1.9%
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2021 growth forecast 1.8% from 2.0%
Perhaps the biggest takeaway however was the omission of the line that the BOC see the current level of the policy rate as stimulative which is no doubt dovish and suggestive that rate cuts could be coming.
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USDCAD has jumped by around 65 pips since the announcement in a swift move higher. BOC Governor Poloz and senior deputy Wilkins will hold a press conference at 15:15 GMT in another key event for CAD. Source: xStation
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In unrelated news there’s been a flurry of activity across other asset classes in the past half an hour after it was revealed that Chile has cancelled the APEC summit next month. This caused stocks to dip and safe havens such as TNOTEs and Gold to spike as the phase 1 US-China trade deal was scheduled to be signed at the event. However, it transpires that the cancellation is due to the mass protests in Santiago at present and nothing to do with a US-China trade breakdown and therefore the initial moves have since reversed.
