Yesterday the BoC matched the Federal Reserve’s monetary policy move and cut interest rates by 0.50%. The move was not a surprise, it came at a scheduled meeting in which many market commentators already expected the Canadian central bank to act in a similar fashion. The policy move brings Canadian interest rates in line with the US and 1.25%.
The Canadian dollar sold off as a result of yesterday’s development which coincided with a stabilisation of financial markets. Global stock indices rose steadily while FX markets also displayed an appetite for risk. Both the Australian and New Zealand dollars were bid while the Japanese yen and Swiss franc were sold.
The improving market conditions were also a result of the US ‘Super Tuesday’ outcome. Joe Biden (seen as a much more moderate, market-friendly candidate) saw huge support for his presidential candidate campaign. He won the Texas nomination which puts him almost level pegging with Bernie Sanders (deemed a less market-friendly candidate). It’s now become a 2 horse race with the next major state California seen as going to Sanders.
Today’s economic calendar is very light. The main focus will be on speeches from Bank of England Governor Mark Carney as well as Bank of Canada boss Mr. Poloz.
Written by Viv Savani. 8:57am, March 5th 2020
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