Bank of Canada Holds Rates at 5.00%, Focused on Wage Growth Despite Growth Concerns

Bank of Canada held its overnight rate to 5.00% in January 2023 as largely expected by markets, following up the no change from the previous meetings. The market was pricing in a 15% chance of a rate cut. BOC said, “still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation” Of note the BOC statement no longer says it “remains prepared to raise the policy rate further if needed.” “Labour market conditions have eased, with … Continue reading “Bank of Canada Holds Rates at 5.00%, Focused on Wage Growth Despite Growth Concerns”

Bank of Canada Holds Rates at 5.00%, Economy No Longer in Excess Demand

Bank of Canada held its overnight rate to 5.00% in December 2023 as expected by markets, following up the no change from the previous meeting. The market is pricing in about a 20% chance of a January rate cut. A March cut remains 90% priced in. BOC said “suggest the economy is no longer in excess demand.” BOC saw “further signs that monetary policy is moderating spending and relieving price pressures” The bank repeated that it ” is prepared to … Continue reading “Bank of Canada Holds Rates at 5.00%, Economy No Longer in Excess Demand”

Bank of Canada Holds Rates at 5.00%, Cuts 2023 Growth Forecast To 1.2% from 1.8%

Bank of Canada held its overnight rate to 5.00% in October 2023 as expected by markets, following up the no change from the previous meeting. BOC sees “clearer signs that monetary policy is moderating spending and relieving price pressures” “There is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures”. The bank repeated that it” is prepared to increase the policy interest rate further if needed”. The BOC cut 2023 growth forecast to 1.2% … Continue reading “Bank of Canada Holds Rates at 5.00%, Cuts 2023 Growth Forecast To 1.2% from 1.8%”

Bank of Canada Holds Rates at 5.00% as expected, Warns CPI Higher with Gasoline Prices

Bank of Canada held its overnight rate to 5.00% in September 2023 as expected by markets, following up the 25bps rate hikes from the two previous meeting which extended its tightening cycle after the brief pause in March and April. The market was pricing in a 14% chance of a rate cut ahead of the decision. The BoC has been clear that its policy relied upon developments conforming to its expectations. That clearly has not been the case with recent … Continue reading “Bank of Canada Holds Rates at 5.00% as expected, Warns CPI Higher with Gasoline Prices”

Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore

The Australian Dollar was the best performer of the week, buoyed by improving sentiment in commodities, iron ore hit a five-week high and oil prices YTD highs with hopes for a Chinese economy rebound. The New Zealand Dollar pulled along with it. The US dollar rally was tested this week and ultimately again benefiting from safe haven and yield chasing flows proved its resilience after rebuffing earlier selling. The Dollar Index bounced off 102.84 to close the week at 104.23. … Continue reading “Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore”

Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. Fed Chair Jerome Powell’s remarks at Jackson Hole renewed commitment to combating inflation prompted traders to elevate their expectations for another rate hike within the year. The yen fell to ¥146.6 per dollar after Jay Powell’s speech at one point. That was the lowest level against the dollar since November on Friday, pressuring the … Continue reading “Forex Traders Weekly Outlook – US Dollar and Swiss Franc Attracting Safe Haven Flows”

Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further

The US dollar rally continued again this week benefiting from safe haven and yield chasing flows. 10-year Treasury yields underpinning yen pairs with carry trade impact. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies again under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as the Turkish Lira hits another all-time low and the imploding Chinese recovery impacts the Yuan. The only currency the US … Continue reading “Forex Traders Weekly Outlook – Weak China Pressures Yen & Commodity Currencies Further”

Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies

The US dollar rallied, benefiting from safe haven and yield chasing flows. Treasury yields finished near the highs of Friday and not far from last week’s highs as curve steepeners continued on hopes for a soft landing with PPI slightly higher but CPI lower than forecasts. The move higher in US yields again sees “risk off” extended to the emerging markets. EM currencies quickly under pressure with global risk aversion. We see the folly of BRICs and BRIC wannabes as … Continue reading “Forex Traders Weekly Outlook – Higher Yields Pressure Yen & Emerging Currencies”

Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest

Many catalysts for the foreign exchange markets with the Bank of England, Reserve Bank of Australia and Bank of Japan JGB moves and the larger than expected US treasury funding program. Throw into the mix rating agency Fitch downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ on Tuesday. Following the increased funding needs and Firch downgrade the move higher in US yields saw “risk off” extended to the emerging markets. EM currencies … Continue reading “Forex Traders Weekly Outlook – Rating Change Crossfire Hit Emerging Markets Hardest”

Forex Traders Weekly Outlook – Yen Gone Wild, Eyes on RBA & BOE impact on Pound & Aussie

The focus in foreign exchange this week was the yen, with the Bank of Japan tinkering with the YCC increasing volatility in the USDJPY and the yen crosses. While the soft widening of the YCC initially saw the yen rally the dollar benefits from strong US data. Keeping it in perspective the two key pillars of the US dollar’s rally since it climbed from early 2021 have been growth and interest rate differentials. The curve that impacts forward swaps also … Continue reading “Forex Traders Weekly Outlook – Yen Gone Wild, Eyes on RBA & BOE impact on Pound & Aussie”