(07 MARCH 2018)DAILY MARKET BRIEF 2:Canada to maintain monetary policy intact

In the context of growing tensions with its first commercial partner, fighting on the front of NAFTA’s new terms and conditions and recently adding up tariffs on aluminum (10%) and steel (25%), Bank of Canada Governor Stephen Poloz faces the unique choice of maintaining monetary policy unchanged during tomorrow’s monetary policy meeting in Wellington, Ottawa. Currently given at 1.25%, BoC’s lending rate benchmark is not expected to rise until the second half of 2018 (last hike in January 16th, 2018).

Though market volatility remained lively in previous days, Canadian S&P/TSX index remained stable, valued at 15’545 (+1.05% since Monday, March 2nd 2018), supported by major sectors and particularly Health Care, Materials, Energy and Financials while the only laggard remained Industrials, strongly impacted by Bombardier (-4.80%) and Canada National Railway (-1.83%) underperformance. Materials stocks outperform broader market due to weaker USD (Gold and Silver rise) backed by decreasing fears of trade wars. On currency side however, we see further weakness emanating from CAD against major currencies. USD/CAD, EUR/CAD and GBP/CAD trade at 1.2929 (+5.41%), 1.6063 (+4.67%) and 1.7962 (+2.65%) since February 1st, 2018.

By Vincent Mivelaz