The Central Bank of Canada should not the law in 2016
Bank of Canada (BoC) will be grateful for a more stable macroeconomic environment in the publication of the interest rate statement on Wednesday July 13 at 10:00 AM EDT. The central bank is expected to keep its interest rate unchanged at historically low benchmark of 0.50 percent. The goal for CAD traders will be the publication of the quarterly report on monetary policy. As there is little action expected the BoC in the third quarter, the Governor Stephen Poloz could try to use peaceful language to downward pressure on the Canadian dollar in an effort to boost exports. BoC Governor will hold a press conference at 11:15 am EDT.
The BoC has been proactive in 2015 with two rate cuts to come from the oil price fall. This year, the central bank was more patient amid rising macro headwinds. The factors that are beyond the control of Canada, such as energy prices and market uncertainty triggered by political events in Europe, led to a depreciation of the CAD. The biggest factor supporting the CAD was the apparent stability of US growth and low exposure to British trade. The BoC would take its proactive position if the energy prices seem to be headed lower and intervene with monetary policy if necessary.
The combination of a new Prime Minister to come sooner than later, the Japanese elections gaining the LDP in power markets have stabilized with the promise of new stimulus measures and reduce the tendency of risk aversion that followed the vote Brexit result. Canada is still considered the fiscal stimulus program pilot of the major economies with the Bank of Canada should wait until the fall before a change in monetary policy.
USD / CAD lost 0.637 percent in the last 24 hours. The pair is trading at 1.3027 before the release of the rate statement by the Bank of Canada on Wednesday. New at the beginning of the trading week put the USD on the back foot as risk aversion decreased and with it the attractiveness of the dollar as a safe haven. Canadian employment diverge US employment sector of the elastic, so a full on CAD rally is not expected given the negative outlook on the economy depends on resources.
The Canadian labor survey published at the same time the US non monster payroll farm (NFP) report shows a drop of 6.8 percent unemployment rate as the economy lost 700 jobs this month. The lowest unemployment rate is explained by a decline in the participation rate to a low of 16 to 65.5 percent. The divergent path of employment in both sides of the border and the softness of the energy prices will keep the CAD under pressure.
The oil West Texas increased by 0,594 percent in the past 24 hours. The energy price is trading at $ 45.59 after crude rebounded thanks to the weakness of the USD. The Organization of Petroleum Exporting Countries (OPEC) has lowered its forecast for global growth to 3 percent in 2017, citing the impact of Brexit vote will have on global growth. OPEC still maintains its forecast of world demand at 1.2 million bpd, which is 300,000 higher than the average of 10 years.
The biggest indicator of CAD this week will be the release of the report on monetary policy by the Bank of Canada (BoC). The central bank has issued warnings about rising household debt and tried to limit the number of new mortgages that low rates have led prices higher housing that would not make a reduced rate their favorite option . Global macroeconomic headwinds forced the BoC in a corner where the expectation seems to be the only option. Meanwhile the effects of the Canadian government stimulus program announced in March and looking for the Fed, which also carries its own warning about the rate of global growth is subject. It greater expectations of easing by central banks of Japan and the United Kingdom as deflation concerns are short term higher
market events to watch this week :.
Wednesday, July 13
10:00 CAD BOC Monetary Policy Report
10:00 CAD BOC Rate Statement
10:00 CAD night Price
11: 15 CAD BOC Press Conference
Thursday, June 30
4:30 GBP current account
8:30 CAD GDP m / m
8:30 USD claims unemployment
CNY manufacturing PMI 9:00 p.m.
9:45 p.m. CNY manufacturing PMI Caixin
Friday, July 1
4:30 GBP manufacturing PMI
10:00 USD ISM Manufacturing PMI
* All EDT
hours for a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
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