Canadian dollar falls to the lowest since March ahead of Macklem speech | Forexlive
Yesterday the Bank of Canada left rates unchanged at 5.00% but the market isn’t sure they’re done. The October meeting is priced at a 13% chance of a hike and that rises to about 30% for the Dec 6 meeting.
The BOC statement maintained a hawkish bias, saying:
The Governing Council remains concerned about the
persistence of underlying inflationary pressures, and is prepared to
increase the policy interest rate further if needed
Today’s speech is an ‘economic progress report’ which are the speeches delivered by BOC members the day after decisions that don’t include a press conference. The aim is to clarify any misinterpreted signals from the statement.
The BOC is clearly in a wait-and-see mode right now and there are strong signs of a slowdown. So strong, in fact, that the Canadian dollar is at the lowest since March despite a nine-day rally in crude oil. With oil looking like that streak will break today (currently down 60-cents) the pressure on the loonie is even stronger. If anything though, I expect Macklem to ‘talk tough’ on inflation, which could force USD/CAD lower, at least temporarily.
USDCAD daily
In the bigger picture, I’ve been calling for Canadian dollar weakness for awhile.