The Bank of Canada raised rates as expected and removed the word “gradual” from the statement. The hawkish tone is also seen in upbeat growth and inflation forecasts. USD/CAD falls towards 1.3000, nearly 100 pips.
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The Bank of Canada is set to raise interest rates from 1.50% to 1.75% in its October meeting. The move was well-telegraphed in advance. The new trade deal, called USMCA instead of NAFTA, lifted a heavy cloud of uncertainty from the Ottawa-based institution. The Bank had been keen to hike before the deal and now faces no impediment. However, recent data has been shaky with September’s inflation report missing expectations. Will the BOC hint of a long pause before the next move? Or will confidence prevail?
Additional topics that may be of interest are the housing markets in Toronto and Vancouver as well as the heavy discount that Canadian oil gets in markets. Problems in shipping the black stuff make Canada’s key export not as profitable as it used to be. Crude generated from tar sands in northern Canada competes with growing production of shale oil in the US.
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