The business sentiment survey released Monday by the Bank of Canada revealed that companies’ confidence in the Canadian economy remains high, although the survey did paint a somewhat less rosy picture than at the start of the summer. When polled on their expectations for inflation, the hot topic at present on markets, 40% of respondents reported that they see inflation above 2% within two years. This could be related to the fact that the intention to invest and hire new workers remains substantial.
In short, this report appears to be consistent with decelerating growth in Canada, a view shared by the BoC. Our economists have even noted that the BoC should tighten its monetary policy, although the timing remains difficult to determine with NAFTA renegotiations under way.
For U.S. dollar sellers, given the context in which the Canadian economy continues to perform well and the U.S. Federal Reserve could announce another rate increase in December, the 1.2600 – 1.2800 zone represents a realistic target.
Today, we’ll be keeping an eye on U.S. Industrial Production data and quarterly earnings results for several major companies.
Julien Duquette
Range of the day: 1.2480 – 1.2590