We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Japan's Finance Minister Taro Aso: Will discuss global economic downside risks at #G20 -BBG
  • Heads Up:🇺🇸 USD Monthly Budget Statement (SEP) due at 00:00 GMT (15min), Actual: N/A Expected: $86.0b Previous: $119.1b https://www.dailyfx.com/economic-calendar#2019-10-15
  • (Asia Pacific AM Briefing) AUD/USD Downtrend Held, Yen Up. US-China Trade Deal Optimism Faded $AUDUSD $USDJPY - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2019/10/14/AUDUSD-Downtrend-Held-Yen-Up-US-China-Trade-Deal-Optimism-Faded.html?CHID=9&QPID=917702 https://t.co/jJPPKvDHdy
  • The $AUD could be at risk of reversing gains recorded so far this month if the recent ‘phase 1’ US-China trade agreement fails to be finalized. Get your market update from @RichDvorakFX here: https://t.co/uKq0SepxRG https://t.co/sJJSFKXjjn
  • The $SPX's range Monday was the second smallest in the past year. That wouldn't be particularly unusual if it weren't for the supposed break through in the US-China trade war the previous active trading day (Friday)... https://t.co/dUnaRCZufd
  • Some of top event risk over the next 24hrs are: Eurozone ZEW Survey (Economic Sentiment) for October [9:00 GMT], German ZEW Survey Expectations for October [9:00], and New Zealand’s YoY Consumer Price Index [21:45] #NZD #Eurozone
  • The $SGD is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the $SGD and how to trade it from @ddubrovskyFX here: https://t.co/eWLM9XZs5Y https://t.co/PyWV2maVHY
  • RT @bbands: If you are based in Chicago, I'll be joining @IG_US on October 28th for a talk on applications of Bollinger Bands in forex. Com…
  • As expected, sentiment couldn't find much follow-through after the conclusion of US-China Phase 1 talks last week. The MSCI #EmergingMarkets Index is off to an eerie familiar decline saw after the US-China #G20 trade truce back in June - https://t.co/fTs63TY1LB https://t.co/revJYXI2HX
  • List of countries engaged in a trade war (or may be entering a trade tiff) US-EU 🇺🇸🇪🇺 US-China🇺🇸🇨🇳 India-Brazil🇮🇳🇧🇷 Malaysia-India🇲🇾🇮🇳 South Korea-Japan🇰🇷🇯🇵
CAD Drops as Bank of Canada Flags Concerns Over Trade Wars

CAD Drops as Bank of Canada Flags Concerns Over Trade Wars

2019-07-10 14:30:00
Justin McQueen, Analyst
Share:

CAD Analysis and Talking Points

  • BoC maintains interest rates as expected at 1.75%
  • Cautious monetary policy statement given trade war risks.

See our latest Q3 FX forecast to learn what will drive the currency through the quarter.

CAD Drops as Bank of Canada Flags Concerns of Trade Wars

Growth: The Bank of Canada kept interest rates unchanged at 1.75% as expected. In light of recent encouraging data, the BoC had upgraded their Q2 GDP forecast to 1.3% from 1% citing an unwind of the temporary factors that had plagued GDP growth in the beginning of the year. Consequently, the central bank forecasts 2019 growth at 1.3%, up from April’s forecast of 1.2%, however, this remains below the 1.7% expected in January. The BoC continue to highlight that global trade conflicts remain the largest risks to the global and domestic outlook, thus this caution has pushed the Canadian Dollar lower.

Inflation: Despite both headline and core inflation hovering around the middle of the BoC’s target range of 1-3%. The BoC expect inflation to drop 0.1ppt in both 2019 and 2020 to 1.9% and 2% respectively with near term impacts being due to dynamics in gasoline prices.

Market Response: In reaction to the more cautious BoC statement, the CAD drop against the USD with USDCAD back above the 1.3100 handle to test the top of its recent range at 1.3140. Overall, the statement emphasises that the BoC will remain on the side-lines with the outlook largely determined by the outcome of the US-China trade wars. As such, the BoC are likely to stand pat throughout the remainder of the year, while the bar to raise interest rates has increased slightly.

USDCAD Price Chart: 1-minute time frame (Intra-day)

CAD Drops as Bank of Canada Flags Concerns Over Trade Wars

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.