Who is making the correct moves for their economy the BOE or the BOC?
There is little data of consequence released form both Canada and the UK this week. To put it bluntly I’m am of the opinion the Canadian economy is looking far healthier than the UK’s. We have seen two consecutive rate hikes from Canada in a row. A rarity from a central bank. It shows real faith in economic growth.
Mark Carney, the governor of the Bank of England (BOE) has recently hinted at a rate hike and investors have bitten. Apparently there is a 77% chance of a rate hike on November 2nd. I am not so convinced, the data a hike is based on is misleading. Inflation at 2.9% is only healthy if average wage growth is at a similar pace. At present it is far from it and we have seen a decline to 2.1%. Unemployment is currently being lauded as the best levels since the 70’s, but we have only recently had zero hour contracts added to the equation.
OPEC Deal under threat
Canada’s primary export is oil and due to this oil price can cause fluctuations in Canadian dollar value. We have seen oil gain value of late and this has benefited CAD. It is important to keep up to date with an news form the Organisation for Petroleum Exporting Countries (OPEC) as there is currently a fragile deal in place to limit global supply between it’s members. Saudi Arabia however has threatened to flood the market should any members breach the agreement which has happened in the past. If Saudi Arabia to carry through with their threat expect the Canadian Dollar to suffer as a result.
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