The Canadian dollar was given a needed boost yesterday, after its recent 10-day low. The Bank of Canada’s (BoC) Governor Stephen Poloz gave a speech which added fuel to the fire for the ‘Loonie’. He touched on the Canadian interest rates and appeared positive despite the speech made from Carolyn Wilkins, another BoC governor just days before which was received as a sell-off.
Poloz Describes Canadian Interest Rates as “About Right”Wilkins’ Speech Sparked a Fierce Sell-Off Prior to Poloz Speech
Deputy Governor Carolyn Wilkins initiated a fierce sell-off of the Canadian dollar following her speech at the International Finance Club of Montréal. Within it, her comments hinted towards cutting the cash rate before the nascent global slowing arrives in Canada, rather than wait until it has happened. She highlighted that Canada’s economy was in a good place but that the global economy was facing challenges in the near future.
Interpreting Poloz’s Speech for the CAD Outlook
Analysts have highlighted that Poloz’s reference that monetary conditions are “about right” is notable for the CAD. They noted that this suggests no particular urgency for the Bank to ease soon. Following Wilkin’s speech, a quick sell-off of the CAD was observed but analysts are hoping that this “irrational exuberance” should be unwound. Despite these interruptions to the CAD trading, it has begun to stabilise and was aided by resilient inflation figures mid-week.
The outlook for the Canadian dollar will focus on the potential change in rate policy which previously put the ‘Loonie’ up top as the best performing major currency in 2019. Should the policy change it has a risk of knocking it from the top spot, if this does happen, it could play well out against an improved backdrop for the pound sterling.
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