The Canadian dollar was under pressure Tuesday further to the release of the Bank of Canada’s Financial System Review, which is intended to assess the vulnerability of the Canadian economy in case of a major shock. Governor Stephen Poloz and Deputy Governor Carolyn Wilkins repeated that high household debt levels and housing market imbalances were the main vulnerable areas for the Canadian economy. The strength of the economy, stricter lending rules and rate hikes in 2017 should mitigate these risks.
In his testimony before the Senate Banking Committee yesterday, U.S. Federal Reserve (Fed) Chair nominee Jerome Powell estimated that the U.S. economy could grow 2 to 2.4% in 2018 and stated that the case for a rate hike in December at the next Fed meeting was strengthening.
The pound sterling is up in the wake of rumours suggesting that England would honour the financial commitments identified by the European Union, thereby eliminating a major obstacle to Brexit.
This morning, we’ll be keeping an eye on the second reading of U.S. GDP data, which could come in slightly higher than the first one. A number of Fed members will also be speaking again.
Mark Donohue
Range of the day: 1.2775 – 1.2875