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

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

Forex Critical: Mexican Peso Hits Key Milestone After USMCA Passage

The U.S. Senate approved the U.S.-Mexico-Canada Agreement (USMCA) trade agreement on Thursday, January 16th. That timing may mark a major milestone and turning point for the Mexican peso against the U.S. dollar (USD/MXN). The following day, USD/MXN sliced through the low of 2019 and hit a 17-month low. I have been bullish on the Mexican … 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

The Canadian Dollar Pushes Past A Dovish Bank of Canada

The Bank of Canada released its latest pronouncement on monetary policy on the heels of a rapid rally for the Canadian dollar (FXC). USD/CAD was down 5 straight days going into the release of the January, 2019 Monetary Policy Report. Four of five of those days delivered substantial declines. The Bank provided a truncated summary … Read more

Forex Critical: The Latest NAFTA Scare Reverses for the Canadian Dollar and Mexican Peso

Last week, financial markets were abuzz with rumors that Canada was preparing for the U.S. to exit NAFTA, the North American Free Trade Agreement. No official statement ever emerged and within three trading days the entire impact of the scare reversed. For example, the rumors weakened the Canadian dollar (FXC) significantly against the U.S. dollar … Read more

Canadian Dollar: Economic Data Overriding the Brakes of the Bank of Canada

The Canadian dollar (FXC) is at an interesting juncture. Strong economic data has strengthened the currency but the Bank of Canada (BoC) has applied brakes on currency’s rally. The Canadian dollar weakened in the wake of policy statements in October and December. The last word of 2017 went to the economic data as hot inflation … Read more

Canadian Dollar Weakens Further Despite Earlier Policy Warnings

Central banks are getting pretty good at having it both ways. Despite two rate hikes, one in July and one in September, the Bank of Canada (BoC) has talked its way to a net no change in the Canadian dollar (FXC) versus the U.S. dollar (DXY0). Source: As the chart above shows, the Canadian … Read more