News & Analysis
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The Canadian dollar was one of the more exciting G10 currencies against the dollar last week with only the Norwegian krone and British pound proving more volatile.
This week’s FOMC meeting not only marks the first of eight meetings in 2020 but also the first time Jerome Powell faces both media and markets since the phase one trade deal was signed.
Thursday’s MPC decision will be the least clear cut in years, with UK data uncertainty and global conditions providing compelling arguments for both an “insurance” rate cut and for no change. Hard UK macro data such as retail sales and GDP have made it clear that the...
G10 FX markets are trading with a risk-off feel this morning, with the US dollar up against much of the G10, but down versus JPY and flat against EUR. The parameters of the virus’s epidemiological characteristics, namely its virulence and fatality, will be in focus this week, as will the extent of its international contagion.
The loonie’s price action mapped roughly what happened in fixed income markets as traders also trimmed their bets of a rate cut by the Bank of Canada in March at the margin. The implied probability of a cut in March now sits at 24.6%.
CAD The loonie sold off substantially during yesterday’s session as the Bank of Canada’s policy statement removed the word “appropriate” when describing current monetary conditions. Upon its release, market’s took this as a signal that rates will be changed in the...
Markets have previously been wrong-footed when trying to predict the Bank of Canada, and it looks like they may be again if verbal communication does become Poloz’s main tool to stimulate growth.
The loonie was sent tumbling yesterday after comments from OPEC’s Secretary-General Barkindo sparked fears that the cartel would scale back previous supply cuts. Yesterday’s manufacturing sales data was also disappointing with the release undershooting expectations by 0.1 percentage points at -0.6% MoM.
The RIA news agency cited comments from OPEC’s Secretary-General Barkindo yesterday who said the March meeting will go ahead. This goes against the markets preconception that the status quo in output cuts will be maintained until a meeting is held in H2 2020.
Last week’s UK data and MPC commentary overwhelmingly pointed towards a rate cut from the Bank of England.