Forex Investment and Currency Trading

On June 10 the BoC shocked financial markets by not only keeping its key interest rate unchanged at 3.00% (there was almost unanimous consensus for a 25bps rate cut) but moved back from an easing to a neutral bias. After tougher inflation talk from the Fed and ECB ahead of the June 13-14 G8 summit, [...]

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Inflation fixation
This week saw a firmer-than-expected CPI report that served to cast some doubt on whether Canada can remain an “island” of low inflation. April’s monthly, seasonally-adjusted increase in the CPI of 0.4% (headline and core) heightened concerns that inflation may be percolating. To be sure, the nation’s inflation rate remains very subdued on an [...]

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The Current Situation
Seeming Immunity: Both headline and core inflation measures rose in April, but remained below target despite rising global relative pricing pressures. Canada’s seeming immunity thus far stems from the strong CAD’s lowering of import prices for most non-food and -energy goods (Figure 3), and from slower home price appreciation (Figure 4). The dampening [...]

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