Loonie Posts on Forex Blog
Inflation a Global Concern - Canadians Hold at 3%
Jun 10, 2008
The Bank of Canada joined a global chorus of inflation fears today, holding rates steady at 3%. Most traders had forecast a 25bps cut after the last 2 policy meetings featured 0.5% rate cuts and April inflation came in below 2%. But the writing is on the wall as the Bank stated:
"If current levels of energy prices persist, total CPI inflation will rise above 3% later this year...Against this backdrop, the bank now judges that the current stance of monetary policy is appropriately accommodative to bring aggregate demand and supply into balance and to achieve the 2% inflation target. There continue to be important downside and upside risks to inflation in Canada, which the bank will monitor closely."
The BOC joins the US, Euros, and Brits on warning of impending inflation concerns. New Zealand alone seems likely to cut rates in the near future among the major currencies.
Interestingly, Axel Weber of the ECB seemed to soften his tone from the previous week. At a speech in England, he stated that a mild winter may have exaggerated Q1 growth. Last week he was a Euro bull, repeatedly stressing the ECB was seriously considering a 25bps rate hike in July. German Q1 GDP growth came in at 1.5%, thanks in large part to unusual construction spending according to Mr. Weber.
With the recent wave of central bank warnings - watch for an interesting G8 Finance Minster meeting this weekend. The meeting, in Osaka Japan, kicks off on Friday June 13th at 7pm local (3am est). Since Forex markets will still be open, Cash does not expect a major announcement until Saturday At 1:30pm local Saturday (9:30pm est Friday), will be the Chairman's press conference. Given the spike in oil and chatter of central banks recently, it may be worth getting to the bar later than usual Friday.
Loonie, CAD, inflation, G8, interest rates
Tidbits Under the Radar
Jun 6, 2008
I won't recap the events of today - just about every news outlet has reported the record rise in crude, the jump in unemployment, and 3% drop in US equities.
With those events dominating headlines, several nuggets of information may have slipped by.
1. German industrial production fell 0.8% in April and factory orders contracted for a 5th month.
2. The French April Trade Balance balance beat expectations, coming in at -€3.7 billion vs the expected €-4 billion reading.
3. The CAD and NZD moved weakly against the greenback The NZD can be explained by the RBNZ comments Thursday. The CAD weakness may indicate that forex traders anticipate a rate cut from the Bank of Canada. The interest rate currently stands at 2.75%, and may be cut 0.25% on Tuesday.
4. US wholesale petroleum inventories jumped 8.8% in April. Additionally, March inventories fell less than previously reported. The March drop of 5.6% was revised higher to 4.5%
5. The 6 member Gulf Cooperation Council will meet Monday to discuss technical issues related to the proposed monetary union in 2010. Oman has already indicated it will not join the union.
Loonie, CAD, NZD, oil, Kiwi
Loonie Trouble Ahead?
Mar 22, 2008
David Olive suggests their are 5 reasons the Loonie may be in trouble.
1. Commodity prices are expected to fall. So far, high prices for Canadian oil, natural gas, wheat and other commodities has spared Canada. As the US slow down continues, commodity prices are expected to fall.
2. The Credit Crunch. Since January 07, the world's largest banks have written off 81 billion. As a result, banks are holding onto cash, distrust of collateral, and reluctant to loan. A credit crunch crimps global economic growth, including Canada.
Read more at thestar
Loonie, CAD, Credit Crunch
