21 Jan 2014
USD/CAD loses some bullish momentum from stronger than expected data
FXstreet.com (London) - USD/CAD has lost some of the bullish momentum from stronger than expected manufacturing shipments data.
Positive shipments momentum
Canadian manufacturing shipments rose more than expected in November, up 1 percent month-on-month versus the consensus expectation for a 0.3 percent rise. While the downwards revision of October’s print to 0.7 percent translates to an inflation-adjusted 0.7 percent rise in November, it is still a positive sign of positive momentum. The report from the Canadian Imperial Bank of Commerce showed that transportation shipments were a “key driver”. Motor vehicle shipments gained 5 percent while machinery and equipment sales added 5.4 percent.
Bank of Canada MPR
But while the CIBC report has given the CAD some relief, markets may be reticent to push the Loonie too high ahead of tomorrow’s Bank of Canada monetary policy report and accompanying press conference.
Bank of Canada Governor Stephen Poloz has previously stated that he wouldn’t move to raise rates until there was an upturn in consumer spending and jobs growth. However, with weak jobs numbers and inflation falling a long way short of BoC target rates, any rate hike is unlikely to come until mid-2015.
While Poloz has abandoned his predecessor Mark Carney’s plans to steadily hike rates ,it may take a shift from neutral to a dovish stance in tomorrow’s MPR to put further pressure on an already battered CAD.
Fed could aid BoC
Poloz may be reticent to hike rates, however he may be given a helping hand by the Fed’s schedule of tapering its asset purchase programme down from its current USD75bn a month. As US bond yields rise, so will Canadian yields, rising Canadian long-term rates. Speaking in a television interview at the beginning of the month, Poloz stated that: “Those kinds of pressures are the positive ones – if the U.S. economy strengthens as we believe, those are very welcome market pressures.”
USD/CAD is currently trading at USD1.0975, with the CAD selling off from its recovery to CAD1.0967. The pair remains in short-term bullish territory, up 0.20 percent on the open.
Positive shipments momentum
Canadian manufacturing shipments rose more than expected in November, up 1 percent month-on-month versus the consensus expectation for a 0.3 percent rise. While the downwards revision of October’s print to 0.7 percent translates to an inflation-adjusted 0.7 percent rise in November, it is still a positive sign of positive momentum. The report from the Canadian Imperial Bank of Commerce showed that transportation shipments were a “key driver”. Motor vehicle shipments gained 5 percent while machinery and equipment sales added 5.4 percent.
Bank of Canada MPR
But while the CIBC report has given the CAD some relief, markets may be reticent to push the Loonie too high ahead of tomorrow’s Bank of Canada monetary policy report and accompanying press conference.
Bank of Canada Governor Stephen Poloz has previously stated that he wouldn’t move to raise rates until there was an upturn in consumer spending and jobs growth. However, with weak jobs numbers and inflation falling a long way short of BoC target rates, any rate hike is unlikely to come until mid-2015.
While Poloz has abandoned his predecessor Mark Carney’s plans to steadily hike rates ,it may take a shift from neutral to a dovish stance in tomorrow’s MPR to put further pressure on an already battered CAD.
Fed could aid BoC
Poloz may be reticent to hike rates, however he may be given a helping hand by the Fed’s schedule of tapering its asset purchase programme down from its current USD75bn a month. As US bond yields rise, so will Canadian yields, rising Canadian long-term rates. Speaking in a television interview at the beginning of the month, Poloz stated that: “Those kinds of pressures are the positive ones – if the U.S. economy strengthens as we believe, those are very welcome market pressures.”
USD/CAD is currently trading at USD1.0975, with the CAD selling off from its recovery to CAD1.0967. The pair remains in short-term bullish territory, up 0.20 percent on the open.