It seems markets are still digesting the mammoth swings which occurred yesterday for the Canadian Dollar. It seems Canada started the second quarter much like it started the first quarter of 2015, in recession. The first quarter saw an annualized rate of recession at -0.6%, and now we have begun the second seeing an initial contraction of -0.1%. Recession is defined by two successive quarters in a row of economic contraction, and Canada is now only a few months away from being in this category.
Policymakers have maintained the next rate move – whether up or down – would depend on the pattern of economic data in the coming months. The next rate decision will be announced by the Bank of Canada on July 15, when it will also release its quarterly Monetary Policy Report. The MPR is normally used to justify a change in the base interest rate if they wish to make one, so markets may now be looking ahead fo July 15th very keenly.
However, most analysts believe the BoC are only slightly more likely to cut rates further, and overall the consensus is for no policy change, only for a revised forecast of Canadian economic growth.
So do not expect rates to cannon up to 2.0 for GBP/CAD anytime soon. Call into the trading floor today on 01494 787 478 to discuss your requirements over the next few weeks and how you may be affected.