To date, there appears to be disagreement on the direction that Stephen Poloz and the Bank of Canada (BoC) will take with regard to monetary policy. Some observers will say that the key rate will be raised to slow down robust economic growth and others, in contrast, will say that the rate will not be raised in order not to put too much pressure on record household debt levels. We can also see this disagreement in the current divergence in forecasts among the major Canadian banks on the USD/CAD pair. The release of Retail Sales and especially inflation data this morning could clear up this disagreement. This reading will be important, as for the first time in the past nine months, annualized inflation is expected to meet the BoC target of 2%. Naturally, before anyone breaks out the champagne, inflation will have to at least stay at that level in the months to come.
In uncertain times such as these, contacting your trader to review your hedging strategy for the new year would be an excellent idea.
Just in time for the holidays, major U.S. firm AT&T (NYSE:T) announced that it would give a USD 1,000 bonus to each of their 200,000 employees in response to the tax reform bill.
Yusuf Kocagozli
Range of the day: 1.2775 – 1.2880