The Canadian dollar has had a turbulent trading session today. The two main factors that will guide the DAC :. The Bank of Canada (BoC) 10:00 AM EDT Statement and the release of US oil inventories at 10:30 am EDT
The BoC as expected has not changed its benchmark interest rate of 0.50 percent. Also planned is the addition of comments around Alberta wildfires not fully quantified impact on the economy. The central bank was optimistic, saying that the economy would rebound in the third quarter of the year, with the first entry in line with previous forecasts. The second quarter is expected to be a contraction of the economy remains too dependent on natural resources.
The declaration of the BoC clearly shows a change in monetary policy is not coming this year. At least until things change significantly from the forecast of the central bank both a journey into negative rates and higher rates on the table depending on the performance of the Canadian economy. The risk of low interest rates records to continue to increase as household debt rises, but the government and the central bank remains vigilant.
USD / CAD depreciated by 0.77 percent over the past 24 hours. The pair is trading at 1.3043 on a volatile day after the Canadian central bank and the US oil inventory data hit the son. The loonie initially benefited from the BoC statement that kept intact rate and crosses the 1.31 price level quickly, but was pulled back after the release of crude stocks that have shown a decrease of 4 2 million barrels due to disruptions in North America. The loonie continues above 1.30 due to the United States with rates of divergence which got a new life after the release of the April Federal Open Market Committee (FOMC) minutes and rising oil prices boosted by supply disruptions despite the Organization of petroleum exporting countries (OPEC) members hit a high number of record production.
the only surprise of the Bank of Canada's statement was the lack of mention of the soft export data . The weaker currency was supposed to lift exports as the economy tried to turn away from natural resources and in services and manufacturing. Services rebounded, but the manufacturing sector continues to stagnate and has not repaired the damage of Canada in the dollar has had on the sector.
The loonie continues to appreciate against the USD on the back of oil prices and the positive outlook for the Canadian central bank despite weaker economic data at the end of the first quarter and waiting for the same thing for the second quarter. Although not back to their goal of diversification of the Canadian economy away from natural resources, it seems higher oil prices is the oil sands back online and will be provided behind any rebound in the third quarter. If the scenario unfold as the Bank of Canada expects there will be no need for a rate cut this year, and will be aligned with the economists who consider a rate increase next year as the next most movement likely policymakers.
CAD events to watch this week:
Thursday, May 26
8:30 USD Durable Goods Orders m / m
8:30 USD unemployment claims
Friday, May 27
8:30 USD prelim GDP q / q
* All times EDT
for a full list of events planned in the forex market check the economic calendar MarketPulse
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