The Canadian dollar sank yesterday after Bank of Canada Governor Stephen Poloz signaled that he is prepared to cut interest rates in case the economy worsens. The currency is attempting to recover today but is not good at this so far.
Poloz was not particularly optimistic in his speech to Halifax Chamber of Commerce yesterday, saying:
Canadaâs economy has been in recovery since 2009 — for four years — yet economic growth still pales compared to the pre-crisis years. Likewise, the global economy has been growing, on average, at only about two-thirds the pace of growth in the four years prior to the crisis.
Youâre right if you think itâs unusual to have such weak growth in a recovery. It is also unusual to have weak growth for such a prolonged period of time.
At the press-conference after the speech, the Governor said that he cannot rule out an interest rate cut.
Yesterday’s economic data was not bad at all as manufacturing sales rose 1.5 percent to $50.4 billion in January, exceeding forecasts and demonstrating the largest increase since February 2013. Yet it was not able to rescue the falling Canadian dollar.
USD/CAD surged from 1.1050 to 1.1133 yesterday and traded at about 1.1125 as of 3:23 GMT today. EUR/CAD was near 1.5491 following the jump from 1.5384 to 1.5513. CAD/JPY sank from 92.05 to 91.07 on the previous trading session and remained near this level on the current session.
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