Canadian Dollar Weakens on the heels of the US government shutdown
The dollar has been under pressure on the heels of the US government shutdown but its neighbor to the north has experienced even greater negative sentiment on the heels of the governments downgrade to economic growth. The reduction in expectations has likely capped Canadian yields, which will depress the Loonie relative to the greenback.
The Canadian dollar has been weighed down the downward revision to the central bank’s growth forecast to 2.0-2.5%. The US dollar is moving above its 20-day average for the first time in nearly a month. More importantly for investors with Canadian dollar exposure, there appears to be a subtle but important regime change at the central bank under the new governor Poloz and it became evident yesterday.
Previously, minutes of the BOC meetings were not released and the votes of the 6-member governing board are not reported. Statements and policy were announced by the Governor. This changed yesterday. The revisions to growth were announced by the Senior Deputy Governor and in what was also in “lock-up” for 90 minutes, which is what only apparently was done in the past for the Governor. This means that going forward, the speeches by the Deputy Governors may be more important for insight into BOC policy.
On Friday, although the US is unlikely to report is payroll data, the Canadian government will report on non-farm payrolls. Recent employment data points have been strong but the risks given the downgrade of the economy by the central bank are to the downside.
Sorry. No data so far.