🔴 LIVE: The Secrets of ProPicks AI Success Revealed + November’s List FREEWatch Now

CAD Steady Ahead Of Bank Of Canada Decision

Published 2016-12-07, 08:48 a/m
GBP/USD
-
USD/CAD
-
UK100
-
XAU/USD
-
DE40
-
IT40
-
DX
-
GC
-
CL
-

Stock markets around the world continue to climb this morning particularly in Europe where the FTSE and the Dax are both up 1.5% and Italy's FTSE MIB is up 1.2%. ‎US index futures are slightly positive still trading near all-time highs.

Crude oil is also steady today with Tuesday's normal trading correction quickly fading. Late in the day, a 2.2 mmbbl drop in US API inventories helped to shore up support once again, as it indicates the market situation in the US continues to improve with or without any OPEC deal. Oil may remain active through Wednesday’s DOE reports and through Saturdays meeting between OPEC and non-OPEC producers to nail down non-OPEC production cuts.

The loonie has also paused overnight as traders await the Bank of Canada’s latest interest rate decision which is due mid-morning. The decision and statement could have a significant impact on trading in CAD and Canadian stocks today.

The Bank of Canada is the only central bank of the major resource exporting countries that hasn’t cut interest rates this year. Even though the street is not expecting a cut, lingering speculation the Bank of Canada could go dovish just before the Fed goes hawkish and likely raises US rates next week has been weighing on CAD. In the last week, the loonie has underperformed crude oil because of this risk.

Truth is, the Canadian economy did rebound in Q3 as shown by the recent strong GDP report. In addition, Canadian bank earnings were strong and employment growth has exceeded expectations the last two months, indicating Canada’s rebound momentum has continued into the fall and can continue to ramp up with oil prices rising and the service sector expanding. So it looks like the central bank will likely maintain interest rates. A neutral to positive tone in the statement comments about the Canadian economy’s direction could take the lid off the loonie, while a cautious to negative tone could keep the pressure on.

This morning India’s central bank held its benchmark interest rate when a cut had been expected indicating that globally the monetary policy pendulum is shifting from stimulus toward normalization.

Trading in Europe today may remain active ahead of tomorrow's ECB meeting where the central bank is expected to announce plans for what to do about its QE program which is scheduled to end in March. Also in focus is continuing talk about a potential bailout of some kins for Italy's banks, reminding traders some things need to be done regardless of who is in charge politically.

In currency markets, GBP has slipped back a bit following disappointing industrial and manufacturing reports for the UK. Gold continues to stabilise and appears to be base building as the recent US dollar rally comes to an end.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.