Yesterday Stephen Poloz’s first address as Governor of the Bank of Canada allowed the ‘Loonie’ to advance modestly as industry experts assessed his stance on economic policy. However, within a few short hours the commodity-driven currency had shed gains as a result of influential news from the US.
The Canadian Dollar Exchange Rate was in the region of 0.9677 against the US Dollar as of 14:30 GMT
During his speech Poloz asserted: ‘Right now, what we need most is stability and patience. […] What needs to happen next is for export momentum to build and business investment to recover while the household sector settles into a more balanced and sustainable growth path.’
Then in the press conference which followed Poloz continued: ‘It’s a matter of letting Mother Nature do her usual job. We have already set the table; interest rates are low, there is plenty of stimulus in the system. If your question is, is there something else that [the Bank of Canada] can do at this stage, we would say, well, no. We already have a great deal of monetary stimulus in the system and we can see that it’s working, and I think we need to be patent and allow those confidence effects to work themselves out.’
These comments provided a stark contrast to those issued later in the local session by US Federal Reserve Chairman Ben Bernanke.
As Bernanke intimated that, US economic recovery permitting, quantitative easing could be brought to an end by mid-2014 the US Dollar broadly strengthened.
The Canadian Dollar to Pound Sterling (CAD/GBP) Exchange Rate hit a low of 0.6218 pence per C$
Meanwhile the ‘Loonie’ shed 0.7 per cent against the US Dollar, slumping to 96.67 US cents – close to a month-low.
However, the Canadian Dollar was able to gain on two of its broadly softening commodity-driven counterparts, the Australian and New Zealand Dollars. The South Pacific currencies had been adversely affected both by news from the US and by less-than-impressive Chinese manufacturing data, while the ‘Loonie’ was boosted by the expectation that tomorrow’s domestic inflation report will show that inflation rose from an annualised 0.4 per cent to 0.9 per cent in May.
In response to the Canadian Dollar’s movement currency strategist Adam Cole observed: ‘This is really a US Dollar move, so it would be wrong to characterise it as a Canada bear market. We are still negative, and I do still think we’ll make new highs for Dollar/Canada, and that will be a Canadian Dollar story going forward. But, at the moment, Canada is really just caught in the crossfire.’
Current Canadian Dollar (CAD) Exchange Rates
< Down > Up – Little Changed
The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9677 <
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7333 >
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6263 <
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0508 >
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.2425 >
(Correct as of 14:30 GMT)
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