Friday’s news out of the United States was not good: Retail Sales and all sub-components of that index came in well below expectations. However, the market’s mind is elsewhere. Even North Korean missiles are no longer attention-worthy, with the focus of concern the next U.S. Federal Reserve (Fed) meeting on Wednesday. Can the free fall in the USD since the start of 2017 continue despite a Fed that is ready to reduce the size of its balance sheet and to repeat that the current weak inflation is transitory? The Canadian dollar remains strong, but returns into the 1.2400-1.2800 range should be part of the strategy for USD sellers.
Elsewhere, the pound sterling was the star of the show last week. Bank of England Governor Mark Carney appeared rather confident in the British economy and seems to be getting markets ready for an upcoming rate hike.
Bank of Canada Governor Stephen Poloz also appears ready to continue his key rate increase campaign in 2017 and 2018. It could be prudent to diversify your exposure to variable rates by converting a portion of your debts to a fixed rate.
Olivier Cosialls
Range of the day: 1.2110 – 1.2250