Home > XE Currency Blog > Loonie At 2-Month Highs After BoC Comments


XE Currency Blog

Topics5246 Posts5291
By xemarketanalysis June 13, 2017 2:27 pm
    xemarketanalysis's picture
    xemarketanalysis Posts: 435
    Loonie At 2-Month Highs After BoC Comments



    • Markets appear to be in a happier mood today, with Asian, European and US stocks indicies higher.
    • UK inflation continued to accelerate last month, hitting its highest level in almost 4 years.
    • A deal between the Conservative's and the DUP party in Northern Ireland has been largely agreed (BBC)
    • Germany's ZEW survey showed investor morale unexpectedly fell in June.
    • Australian business conditions dipped one point last month to +12.


    The Canadian Dollar rose sharply yesterday in response to hawkish comments from Bank of Canada Senior Deputy Governor Carolyn Wilkins that raised the prospect of an earlier rate hike. After "pretty impressive" first quarter growth and strong employment reports, Wilkins said the BoC will be assessing whether all of the considerable monetary policy stimulus presently in place is still required.


    The Dollar is marginally lower as the headlines in the US continue to focus on the Russia investigation and Donald Trump's battle with justice officials and the media. His attorney general is due to testify later on today in regards to his involvement with the Russian's, and on Comey's firing. Tomorrow's Fed meeting means we are likely to see limited movement until we hear from Janet Yellen with the FOMC's updated economic and interest rate projections. 


    The Pound is broadly higher following the above forecast inflation for May, which showed CPI rose 2.9% in May compared to a year previous. Expectations that a deal is close between PM May's Conservative party and Arlene Foster's DUP party to form a government are also providing investors with a little more confidence in the currency. 


    The Euro remains very quiet, trading within a 40 point range either side of the 1.12 level versus the Dollar. The ZEW institute said its economic sentiment index fell to 18.6 from 20.6 in May, but the current conditions rose to 88.0, its highest level since July 2011. The Spanish central bank meanwhile raised its 2017 growth forecast to 3.1% and its 2018 forecast to 2.5% as the Eurozone continues to see broadening economic activity. 


    The Loonie is at 2-month highs versus its US counterpart following Wilkins comments yesterday, as well as governor Poloz's today that supported the view that the central bank could raise interest rates sooner than previously thought. A scaling back of US rate hike expectations could support further gains for the Loonie over the coming days, with potential for USD/CAD to push lower to the pivotal 1.30 level. 


    The Aussie Dollar was largely unmoved by the NAB's survey that showed a decline in business conditions last month, since they remained close to decade highs, with growth reported across all sectors. 


    Paste link in email or IM