US stocks and oil slipped as Donald Trump threatened not to sign a long-awaited stimulus bill into law. The market sentiment had been already fragile, and Trump’s comments worsened it even more.
What does the Bank of Canada think about the CAD?
The Bank of Canada (BOC) will release the rate statement with an update on the interest rate on December 9, at 17:00 MT time.
Instruments to trade: USD/CAD, EUR/CAD, GBP/CAD
On November 26, the Bank of Canada published an opening statement for the government. According to it, the economy is still dealing with pandemic problems. Moreover, the situation with the Canadian economy will heavily depend on the virus. At the same time, the regulator believes that vaccines and effective treatment will be widely available by mid-2022. The employment is recovering, but it still has fewer jobs than it did before the pandemic. The same goes for Canadian inflation, as the most recent release showed CPI at 0.7% in October. Thus, the Bank of Canada sees such measures as a low interest rate (currently held at 0.25%), and quantitative easing appropriate until the recovery is underway. It’s unlikely that we will see any changes to the interest rate or easing measures. However, the tone of the statement may provide additional insights into the bank’s decisions.
- If the statement is hawkish, the CAD will strengthen.
- If the statement is dovish, the CAD will fall.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.