Back
26 Aug 2014
BoC independent from the Fed, 1.11 target - TDS
FXStreet (Guatemala) - Analysts at TD Securities explained that Governor Poloz spoke behind closed doors at the Canadian Association of Business Economists last night and the doors have remained firmly shut with regard to the content of his remarks.
Key Quotes:
“We can’t imagine the tone was much different than the comments made by the governor on the sidelines of the Jackson Hole conference at the weekend”.
“Firstly, the governor was concerned about what sluggish growth and the rising share of part-time workers in the overall employment picture meant for income growth—key for the economy, given the reliance on domestic demand to drive growth."
"Secondly, he was keen to stress the BoC’s independence vis-à-vis the Fed, suggesting that BoC policy makers had plenty of time to mull rate prospects as the BoC has not been tied to the Fed in recent years and is looking at policy from a slightly different perspective (with the overnight rate at 1% here). In other words, just because the Fed might be starting to think about raising rates, do not expect the BoC to necessarily follow suit. This sort of thinking is bound to get another airing at the September policy meeting—if only in the Q&A—and if Governor Poloz maintain this dovish line, the contrast with what seems to be a less dovish Fed can only weaken the CAD."
"Corporate sellers ahead of the 1.10 and option expiries mid week at 1.10 (reportedly) may be restraining the topside for USD/CAD and funds is getting off to a sluggish start here after the test of 1.10 overnight. But there is still keen interest to buy USD/CAD from the real money sector and we look for limited weakness near-term—solid support should emerge on dips to the low/mid 1.09s. We target a move to the low 1.11s near-term."
Key Quotes:
“We can’t imagine the tone was much different than the comments made by the governor on the sidelines of the Jackson Hole conference at the weekend”.
“Firstly, the governor was concerned about what sluggish growth and the rising share of part-time workers in the overall employment picture meant for income growth—key for the economy, given the reliance on domestic demand to drive growth."
"Secondly, he was keen to stress the BoC’s independence vis-à-vis the Fed, suggesting that BoC policy makers had plenty of time to mull rate prospects as the BoC has not been tied to the Fed in recent years and is looking at policy from a slightly different perspective (with the overnight rate at 1% here). In other words, just because the Fed might be starting to think about raising rates, do not expect the BoC to necessarily follow suit. This sort of thinking is bound to get another airing at the September policy meeting—if only in the Q&A—and if Governor Poloz maintain this dovish line, the contrast with what seems to be a less dovish Fed can only weaken the CAD."
"Corporate sellers ahead of the 1.10 and option expiries mid week at 1.10 (reportedly) may be restraining the topside for USD/CAD and funds is getting off to a sluggish start here after the test of 1.10 overnight. But there is still keen interest to buy USD/CAD from the real money sector and we look for limited weakness near-term—solid support should emerge on dips to the low/mid 1.09s. We target a move to the low 1.11s near-term."