The USD / CAD is lower after the debate among Fed members decreases the likelihood of an increase December rates. Employment data in the US was strong, but inflation and retail sales posted a tepid growth without a deal breaker will do little to convince voters of the FOMC on the fence about rising rate in December. The loonie was a narrow range around 1.3330 as expectations of a rise signal of the highest rates were pushing the price to 1.3370. Interest rate anticipation of divergence has been the engine of the USD / CAD price that commodities have offered little support to the Canadian currency.
The FOMC had a small mention about the Canadian economy:
Foreign economic growth appears to have improved somewhat during the third quarter, after two quarters of slow growth. Economic activity rebounded in Canada after the disruption of energy production earlier in the year,
The price of oil has led the CAD lower. Crude oil prices continued their downward trajectory of last week to turn things around and ending up with a gain after almost heading below the price level of $ 40. The uncertainty and tension that arose after the attacks of Paris and the G20 meeting in Turkey have complicated energy pricing. The attacks have put a premium on crude that the offer may be limited, but then thanks to OPEC the world is flooded with a lot of crude with sailing full of oil tankers worldwide exercising a downward pressure on oil prices.
After the release of the statement in October Federal Open Market Committee (FOMC) October 28 the case for a rate interest hike increased after the failure of the September FOMC. Not having a press conference the market would keep the focus on the Fed statement and capitalized on the opportunity by adding the "next minute" language that has higher rates of return on the table.
the minutes of the October FOMC were released with similar anticipation for investors and analysts to analyze for clues about the next move from the Federal reserve.
the minutes showed Fed members continue debating back and forth on the right to appeal to the economies of the United States. members of the notes are still wary of hiking too early and stifling the momentum of the economy. the other side of this argument is made by members who believe that the Fed could still not communicate his intentions to the market and take greater credibility blow that could jeopardize monetary policy in the future. the risks to keep unchanged the rates are higher than the potential damage done by hike sooner rather than later, but the fact that there are still internal debate reduces the likelihood of a rate hike in December.
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