Yesterday, the Bank of Canada moved forward its estimated date for beginning interest rate hikes to mid 2022 from the previous estimate of late 2022. The Bank has also ended QE by committing to keep its portfolio of bonds intact and only purchasing enough to replace maturing instruments. In response to those moves, the Canadian dollar bounced around a bit but ultimately ended the day up 0.5% from before the announcement, and that is right around where we are this morning. USD to CAD is currently at 1.236 (CAD to USD is at 0.810). Tiff Macklem’s Bank of Canada has been ahead of the curve during the pandemic. It was the first major central bank to announce a reduction in QE back in April as conditions improved and it was subsequently followed by the Fed and other central banks. Similarly, it is now ahead of the most other central banks in its projections for rate hikes. For example, the European Central Bank used today’s announcement to push back against expectations for a rate hike next year. We expect that to change in the near future as all the central banks begin a return to normalcy. Overall market sentiment remains positive with stocks trading around record territory as strong corporate earnings seem to have outweighed the disappointing Q3 GDP results. Oil is down modestly again today and now well off of the multi-year highs it hit earlier this week.
