The BoC’s 50bps Hike Brings Respite For A Weak Canadian Dollar


The BoC raised rates by 50bps to 4.25%.

This was more than the market expected, but this was not a hawkish meeting – there were hints that the end to the tightening cycle is very close.

The Canadian Dollar has been the weakest currency in the G7 over the last 3 months and this looks set to continue as the BoC shift from hawkish to neutral and oil prices drop.

Markets are quiet again on Thursday and it seems the lull will continue into next week when a raft of top tier events should ignite some volatility as US and UK CPI releases will be followed by meetings from the FOMC, ECB, BoE and SNB.

This week was perhaps a low-key warm-up for the big events to come as the RBA and BoC rate meetings provided some clues to the global response to inflation. The RBA raised 25bps on Tuesday, followed by 50bps from the BoC on Wednesday. Canada now has a rate of 4.25% and the message from the bank was that it is…

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