The support provided by the presence of inflationary pressure in Canada for the loonie proved to be short lived. Our currency went on a roller coaster ride on Friday, possibly in anticipation of NAFTA talks, which got underway yesterday, but much more due to fluctuations in the greenback, which serves as a barometer for risk sentiment. Although the news that the inflation rate is approaching the Bank of Canada’s target (2%) slightly reinforced the case for a key rate increase in the spring, nothing appears to be definite yet in the market’s thinking.
In the meantime, attention this week will be on the U.S. Federal Reserve (Fed) as new Chair Jerome Powell testifies before the House of Representatives’ Financial Services Committee one day earlier than expected on Feb. 27.
Lastly, the new wave of sanctions against North Korea appear to be paying off, as Kim Jong Un now says that he is prepared to negotiate with the United States to ensure a better relationship with Washington.
Stéphane Goulet
Range of the day: 1.2590 – 1.2700