At the start of the week, the continued spread of the Corona virus triggered the World Health Organisation (WHO) to announce the disease as a global health emergency. This pressure weighed heavily on the Canadian dollar as a risk-sensitive currency through a reduced market risk appetite. With the breakthrough of treatments coming just in time though, CAD investors looked to be buoyed. A caveat to these celebrations was served by the WHO though, who declared that these breakthroughs do not automatically equate to a cure, which brought the CAD’s strength back towards baseline heading towards the end of play this week.
Meanwhile, CAD also fell under the pressure of poor economic data in the form of the IHS Markit Canada Manufacturing Purchasing Manager’ index (PMI), which is a measure of
manufacturing business conditions.
The index rose to 50.6 in January from 50.4 in December showing growth as the figure was above the 50-point threshold. That being said, this figure only indicated a 0.2% growth, with the market obviously being less than thrilled with the number.
CAD was also cross-examined by the Carolyn Wilkins, the BoC Governor. She provided an outlook for the weeks and months ahead by stating that breaking down provincial barriers was to be the way Canada would keep its economy ‘firing on all cylinders’. That, paired with a reform of the tax and regulatory systems is the way forward in her – and the BoC’s – eyes.
With the BoC’s monetary policy tool kit only being able to take Canada’s economy so far, she has urged economic innovation from a range of investor sources. This has definitely set the tone for the immediate future, with the push for a level global economic playing field being pushed for with increased vigour.
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