The Canadian dollar traded in a rollercoaster manner yesterday. It surged after the BoC raised rates and maintained a hawkish stance, but came under selling interest soon thereafter, perhaps due to the tumble in oil prices. As for today, the spotlight is likely to fall on the minutes from the latest ECB meeting and the US inflation data for June.
Bank of Canada Raises Rates and Maintains Hawkish Stance
The Canadian dollar had a volatile ride yesterday, driven by the BoC rate decision and perhaps the tumble in oil prices. The Bank of Canada decided to raise interest rates to +1.50% from +1.25% as was expected, while in the accompanying statement officials maintain their hawkish stance, noting that they will continue to take a gradual approach on interest rates, guided by incoming data. As for the trade tensions, they said that the impact of trade uncertainty on investment and export is now judged to be larger, but the impact of tariffs on steel and aluminum on growth and inflation is expected to be modest.
At the press conference following the decision, Governor Poloz added to the hawkish narrative of the statement by noting that although there was talk over trade uncertainty, the Bank raised...
Read the full financial markets daily report on JFD Research.