The Loonie has spiked yesterday and managed to hold on to the gains overnight. The pair had some company, as a rising New Zealand dollar led the major G-10 currencies in a broad rally. The weak US dollar follows from President Joe Biden’s plans for a $1.9-trillion relief package.
The Bank of Canada left interest rates unmoved. Some participants were expecting a small cut which would have trimmed rates from 0.25% to 0.10%. As An Alternative, they delivered an upbeat outlook for the economy for the second half of the year. The bank also upgraded its GDP forecasts from the 4.6% y/y prediction in October to 5.2%.
Bank of Canada’s Governor Tiff Macklem recognized the negative-short-term risks to the economy from the latest Covid-19 measures implemented in Ontario, Quebec, and other regions. Macklem said, “the current surge of COVID-19 is a serious setback. With elevated infection rates and stricter containment measures in many parts of the country, households and businesses are facing renewed strains. The economy is slowing, and high-contact activities are once again being hit hardest.”Macklem is optimistic about growth later this year saying, “with effective vaccines now rolling out, the prospects for a strong, sustained recovery through the second half of this year have improved in Canada and across most advanced economies.”
In A different region now, the European Central Bank meeting is today. Analysts do not expect any change in policy but are keen to learn if ECB President Christine Lagarde downgrades her optimistic outlook due to the latest COVID-19 outbreaks in Europe.
There is a lot of U.S. economic data today including, Philadelphia Fed Manufacturing Index, Initial Jobless Claims, Building Permits, and Housing Starts.
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