The North American Alliance of Bullish Central Banks

North American: The United States “What we’re seeing now is an economy that seems to be at an inflection point….we feel like we are at a point where the economy is about to start growing much more quickly, and job creation coming in much more quickly…we see strong growth and strong job creation starting right … Read more

Canadian Dollar: Central Bank Optimism Gives Currency A Fresh Boost

Currency markets were excited for less than an hour over the latest Monetary Policy Report (MPR) from the Bank of Canada. Before the dust settled, USD/CAD, the Canadian dollar versus the U.S. dollar, reached a near 3-year low. Economic optimism from Canada’s central bank gave the Canadian dollar a fresh boost. Bank of Canada Governor … Read more

Canadian Dollar: GDP and COVID-19 Advantage over the U.S. Dollar

The Bank of Canada (BoC) released its latest Monetary Policy Report on July 15, 2020. Neither the report nor the press conference contained any surprises. The BoC did not change interest rates, kept the crank turning on its Quantitative Easing (QE) program, and promised to “hold the policy interest rate at the effective lower bound … Read more

Fresh Hopes for the Canadian Dollar As Central Bank Talks Recovery

The Canadian Dollar After the Canadian dollar (USD/CAD) sold off in the wake of the Bank of Canada’s latest Monetary Policy Report (MPR), I doubled down on my bullish bet on the currency (short USD/CAD). That bet paid off as general weakness in the U.S. dollar took USD/CAD back down to its 50-day moving average … Read more

Canadian Dollar: Bank of Canada Monetary Policy Interrupts A Recovery

Canadian Dollar After the Bank of Canada announced its latest update on monetary policy, the U.S. dollar gained about 1.7% on the Canadian dollar. I thought perhaps the Bank of Canada delivered some incredibly awful news. Nothing in the statement was a surprise. Indeed, the Bank of Canada essentially suggested it would not take rates … Read more

Central Bank Unease: Fed Caps Week of Emergency Actions As Markets Panic

In an earlier post on Sunday, I provided reasons to believe that the market was finally drawing a line in the sand for a sustainable bottom. With anticipation, I pronounced I would go on a shopping spreed down to S&P 500 (SPY) 2600. At the time of writing, it looks like I may have to … Read more

Policy Pressures Significantly Weaken the Canadian Dollar

After hitting a 15-month low, the U.S. dollar versus Canadian dollar (USD/CAD) bounced nearly straight up to the top of its range.

For months, I have tried to stay bullish on the Canadian dollar (FXC), particularly against the U.S. dollar (USD/CAD). Bit by bit, the Bank of Canada has undermined my bullish narratives. The tune from the Bank of Canada (BoC) notably changed in the November report on monetary policy, and last month’s report on monetary policy … Read more

Forex Critical: Canadian Dollar Reacts to a Bottoming Unemployment Rate

My now wavering bullish case for the Canadian dollar (FXC) took a major hit with the November, 2019 Labour Force Survey. Statistics Canada reported worsening unemployment rates both sequentially and year-over-year. November’s 5.9% unemployment rate was an increase from October’s 5.5% and the 5.6% in November, 2018. The chart below suggests an end to the … Read more

From Shocks to Trade War Damage, the Bank of Canada Changes Its Tune

The Bank of Canada changed its tune from the its last pronouncement on monetary policy. At that time, the Bank was very confident about the Canadian economy even as it mapped out the downside risks of the U.S. vs China Trade War. The Trade War remains unresolved three months later, and the Bank of Canada … Read more

Canadian Dollar Benefits from Economic Rebound But Has Significant Risk

The U.S. dollar versus the Canadian dollar (USD/CAD) closed the week at a 9-month low.

“It would be a difficult place for policy, and my sense is that the markets are not really onto the complexity of it. It seems a little too easy that ‘Oh. Interest rates could decline and that will make everything OK.’ That may be true for the small kind of shocks that we’ve had so … Read more