Expected USD/CAD Range: 1.037 – 1.043

Update: In a major surprise to the Canadian financial markets, the Bank of Canada took its already mild hawkish bias on interest rates to a completely neutral stance. The theoretical implication is that the next interest rate move is as likely to be down as it is up. Practically, the change means that an interest rate increase is even further away than previously anticipated. The change is in line with what we have long argued is likely to be the new focus of the bank on exports under Governor Poloz (see our foreshadowing of this move here). There were other changes to the bank’s stance, including a downward revision of growth estimates but these other changes were previously telegraphed by various bank officials.

The markets reacted immediately with the loonie now trading at 1.041 and up over a penny since yesterday morning. We continue to believe that the Canadian Dollar will be even weaker by year end.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.030 – 1.035

Update: As we head into the monthly announcement by the Bank of Canada this morning, the Canadian Dollar is trading at its lowest level in about a week at 1.032. The loonie is down along with its commodity sisters as investors fret over news out of China suggesting that there may be an interest rate raise forthcoming from that country’s central bank. The expectation is that little news will come out of the Bank of Canada release and news conference as both the expected downgrade in growth forecasts as well as the bank’s likely policy statement have been telegraphed and priced into the market. We expect continued US Dollar strength today.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.027 – 1.033

Update: The first major data point since the US government reopened (September nonfarm payroll) was a significant disappointment coming in at 148K versus the consensus expectation of 180K. All asset classes reacted and the US dollar weakened across the board including against the Canadian Dollar. But the loonie quickly gave up its gains and we are now back at the 1.030 level. Retail sales ex-autos in Canada came in above expectations but with all the focus on the US employment situation and its impact on the timing of tapering by the Fed, the loonie got very little lift from that positive domestic news.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …

Expected USD/CAD Range: 1.027 – 1.032

Update: The Canadian Dollar is mildly weaker against its US counterpart today and trading at 1.030. August wholesale sales data in Canada were up 0.5% and stronger than the consensus of 0.3% but weaker oil prices have been holding the Loonie down this morning. The markets are focused on Wednesday’s Bank of Canada policy report as well Tuesday’s unemployment release in the US.

The Big Picture: The commodity boom has seemingly ended (or is at least sputtering). Relatedly, Chinese and other emerging market economies have …