The loonie lost a little over 1% last week due to uncertainty surrounding NAFTA, but also due to the lack of inflationary pressure in Canada and disappointing consumer spending data. Another consequence is that the chances that Bank of Canada Governor Stephen Poloz will announce an additional key rate increase this Wednesday are practically nil, while the outlook for December is mixed.
Although at present the context is looking rather difficult for the CAD, it’s important to keep in mind that upbeat comments from the BoC this Wednesday could quickly lead the wind to shift. After all, one poor showing in Retail Sales is not a surefire sign of a trend.
Meanwhile in Japan, Prime Minister Shinzo Abe and his Liberal Democratic Party easily won their election with more than two-thirds of the seats in parliament. For markets, this victory eliminates a measure of uncertainty regarding the country’s economic future as Abe can now continue with his plan. It remains to be seen whether he will keep his electoral promise to toughen the tone considerably regarding North Korea.
Stéphane Goulet
Range of the day: 1.2575 – 1.2680