USD/CAD: the current interest rate of 0.5%

USD/CAD: the current interest rate of 0.5%

6 September 2016, 12:59
PCM-Brokers
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TRADING RECOMMENDATIONS

 In Canada, there is lower inflation. Overall annual inflation in Canada in July slowed to 1.3%. The level of retail sales in Canada fell in June, contrary to market expectations (-0.1% vs. + 0.5%). Excluding auto sales, retail sales was even weaker (-0.8% vs. + 0.3%). The consumer price index for July also were worse than expected (-0.2% vs. -0.1%).

However, the Bank of Canada believes that core inflation will approach the central bank set the level of 2% in 2017 to the extent that, as will diminish the negative effect of the fall in energy prices. It is unlikely that the Bank of Canada at its next meeting, scheduled for September 7, will resort to a reduction of the interest rate remaining at 0.5%, as the effects of forest fires in Alberta no longer have the impact and the government's plan of fiscal stimulus starts to operate.

The mixed data from the US labor market, published on Friday, caused increased volatility in the currency market and in pairs with the US dollar. UCD/CAD pair in response to the publication of data lost by the end of the trading day on Friday about 120 points. Yesterday in the US and Canada was a public holiday, the US markets were closed on the "Labor Day", the volatility at the end of yesterday's European session went "out".

However, the USD / CAD pair could fall another 90 pips since the beginning of the current trading week in anticipation of the resumption of the rally in oil due to the forthcoming in this month's OPEC meeting in Algeria and the possibility of concluding a collective agreement on the limitation of oil production among the major oil-producing countries.

 However, skepticism about the conclusion of such an agreement is also high. If OPEC meeting again over nothing, then oil prices will resume "down-trend." In this case, the currency whose quotation is largely dependent on the oil price quotations, including the Canadian dollar, followed by followed by oil prices.

The decision is the interest rate will be published in the 14:00 (GMT). The Bank of Canada surprised markets much, if cut rates. In any case, it expected increased volatility during the publication of the decision of the Bank of Canada in the Canadian dollar pairs.

 

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