The Canadian dollar advanced versus the USD after the Bank of Canada announced that the rate benchmark interest remain unchanged at 0.50 percent. The USD / CAD traded below 1.33 as the dollar also got a boost from oil prices rose despite rising crude inventories in the US
The Bank Canada (BoC) was largely expected to keep rates unchanged as the central bank has shifted part of the burden of guiding the economy to the Liberal government elected last year. As part of the campaign promises of investment in infrastructure to stimulate the economy will be close when the government releases its first budget on March 22
Falling oil prices forced the BoC to act so proactive with two interest rate cuts in 2015, but with the reference rate to 0.50 percent there is little room left for monetary policy in the conventional arsenal of the central bank. After a rapid decline in crude prices to start 2016, the BoC was honored, but chose to wait for the budget and the subsequent impact before resorting to unconventional measures.
USD / CAD depreciated 1.20 percent in the past 24 hours. The pair touched highs of 1.3447 before the decision of the Bank of Canada and US oil inventories. Both indicators have boosted the CAD that the BoC has not added to the interest rate difference with the United States and western Texas jumped more than 5 percent after stocks fuel dropped signaling better than expected demand. Crude oil stocks are still at the top but the top oil producer said on March 20 will be held by Saudi Arabia, Qatar, Iraq, Venezuela and Russia have kept the price stable oil.
Canadian fiscal stimulus could be a driver for growth program
following the credit crisis in 08 saw a coordinated effort by central banks to provide liquidity and pushed rates to historically low levels. Monetary easing were used to stimulate growth. The united front was broken when the Federal Reserve announced it would end its quantitative easing program (QE) and possibly a rate hike. Nearly a year after the announcement of QE from the Fed raised rates in a historic movement. Fed economists could not foresee the rapid fall in crude prices and the rout of the emerging stock markets that have put the tightening path on hold.
With record low interest rate of the Bank of Canada is close to the depletion of conventional tools. Central banks such as the Bank of Japan (BOJ) and the European Central Bank (ECB) have been in similar situations and even the Fed; all chosen to introduce QE programs that have so far had mixed returns. Canada, thanks in part to the timing of the elections a new government was well aware of the economic challenges ahead and was part of its campaign to highlight what is that proposes to do. Fiscal stimulus was part of the platform that was elected last year and will have a chance to shine on March 22 when the federal budget is released.
There are a lot of optimism surrounding the dollar, but it could just be a mirage if the federal government does not impress with its stimulus plans and the freezing of oil production does not materialize without let floor for crude prices. The Bank of Canada offered a mixed picture of the economic outlook for Canada. commodity prices remain the biggest risk, while US growth remains moderate and Canadian exporters are set to benefit from a weaker currency in the short term
CAD events to watch this week :.
Thursday, March 10
7:45 EUR Minimum Bid Rate
8:30 EUR ECB Press Conference
8:30 USD unemployment claims
8:30 CAD NHPI m / m
8:30 CAD Capacity utilization rate
4:15 p.m. CAD BOC Gov Poloz Speaks
Friday, March 11
8: 30 CAD employment Change
* All EST
hours for a full list of events planned for the visit of the foreign exchange market the economic calendar MarketPulse
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