Bank of Canada (BoC) as expected kept the benchmark interest rate on hold at 0.50 percent earlier today. The central bank has improved GDP growth forecast to 1.7 percent from 1.4 percent. Overall, the statement and the press conference by Governor Stephen Poloz was optimistic about Canadian growth pick up, but pointing out the factors that could derail. In a global economy that is described as weak Canadian dollar found support stability in oil prices and demand based on the United States.
The International Monetary Fund (IMF) had cut the growth forecast yesterday to 1.5 percent from 1.7 percent in 2016. If downgrade not surprising that the IMF was last update its forecasts in January and Canadian growth factors has not completely followed an upward trend. The weakness of the Canadian dollar gave exports a shot in the arm wth the service sector experienced a recovery that has spurred the creation of jobs in March. Now the question that the loonie appreciated if the Canadian economy will stay the course while energy prices stabilize and the estimated growth in demand from the United States are mixed.
It was a disappointing day for free us. Sales in the core retail improved to 0.2%, but below the forecast of 0.4%. Retail sales surprised with a 0.3% shy of the estimate of a 0.1% gain. It marked the second consecutive decline in the indicator. Consumer spending is the biggest part of the economy, so these numbers could cause problems at a time when the export sector remains weak due to weak global demand. PPI, a key inflation indicator in the manufacturing sector continues to struggle, posting a third decline in four months. The index fell 0.1%, far estimates of a 0.3% gain. Will we see some relief from the CPI on Thursday? The Fed, which sent a resolutely pacifist message about the US economy, has significantly reduced expectations for a rise in rates in April, and if the CPI disappoints, the probability of June 1 move will decrease.
USD / CAD appreciated by 0.28 percent over the past 24 hours. The CAD could not build on gains from Tuesday and the neutral tone of the BoC has not made a strong case for the loonie. Poloz governor said the oil price was CAD engine movements. The Canadian dollar has a strong correlation with the oil price, but still the governor Poloz comments warning about the effects of high CAD had more influence with the market. The USD / CAD has remained below 1.28 overnight and is currently trading at 1.2808 after touching 1.2750 low at midnight EDT.
oil was volatile with Brent lost 0.50 percent and WTI gained 0.126 percent in the last 24 hours. The Doha summit promises to freeze production at record levels and that even if it is signed. Saudi Arabia has expressed doubts as to the conclusion of an agreement if recalcitrant such as Iran, which said it does not freeze until it ramps up its levels pre-sanction. The Saudis said they will not reduce production and lower world demand for oil is flooded with black substance by increasing the pressure on prices.
OANDA MarketPulse Kenny Fisher wrote earlier:
United States' crude prices surged 10 percent last week and the upward trend continued, as crude prices are near the level of $ 42. Crude oil prices held Wednesday despite EIA crude inventory report that showed a surplus of 6.6 million, the overwhelming surplus of 0.9 million barrels. This reading contrasted sharply with the previous version, which showed a sharp decline. Moving to the international oil market, oil producers will meet for an important meeting in Doha on Sunday. Participants at the Doha meeting will be looking to cap production limits and curb the huge global oil glut. However, previous attempts to reach an agreement to reduce production failed. With many producers, including Iran, interested to gradually increase production to raise oil revenues, it is doubtful that we will see dramatic breakthroughs at the Doha meeting.
The US inflation assess the consumer price index (CPI) will be released tomorrow at 08:30 EDT. The index is estimated to be combine to 0.2 percent for basic playback, slowing the previous two months of 0.3 percent growth in inflation. The slowness of the inflationary pressure is a concern for some members of the Fed, which reduced the central bank will act if inflation remains below the target of 2 percent. The argument against the other Fed members is that the risk of leaving the economy "run hot" inflation is too low and could easily be solved with monetary policy, as opposed to anticipate correctly.
The DAC will. Next versions fundamentals and oil prices the action of the United States after Bank of Canada that looks so optimistic, was not fully committed to an accommodative policy
CAD events to follow this week:
Thursday, April 14
8:30 USD CPI m / m
8:30 USD base CPI m / m
8:30 am USD unemployment claims
10: CNY 24:00 q / y GDP
10:00 p.m. CNY industrial Production y / y
Friday, April 15
8:30 manufacturing sales CAD m / m
10:00 USD prelim UoM Consumer Sentiment
* All times EDT
for a full list of events planned in the foreign exchange market check the economic calendar MarketPulse
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