The Bank of Canada wants you to know that rates will not be going up for a long time. That was the key explicit message that Governor Macklem wanted conveyed from yesterday’s news conference and Monetary Policy Report. But the markets actually took a different message away; the bank did not add to its QE program of $5 billion a week despite the larger than expected fiscal deficit announced by the federal government. Since actions speak larger than words, the markets took the lack of action on QE to heart more than the forward guidance on rates and the Canadian dollar strengthened by an additional 0.5% after the announcement. This morning, the Loonie has given up some of those gains in line with a bit of selling in the equity markets in response to a worse than expected job loss report in the US. The net result is that the USD CAD rate is within range but at the lower end of where it has been trading fairly steadily over the last month.
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