The Canadian dollar bucks the US dollar strengthening trend as the Bank of Canada’s rate statement is bullish on the local economy.
USD/CAD is sliding from the highs above 1.14 to 1.1360.
The institution lead by Governor Stephen Poloz did admit that the lower prices of oil and other commodities weigh on the economy and did express some disappointment on global growth.
However, the local picture looks good: stronger exports trigger more business investment and also employment. The BOC still says that higher inflation is due to temporary factors, even though this is already an ongoing phenomenon. All in all, the output gap seems to be smaller than what was projected back in October.
This is a positive BOC statement:
Canada’s economy is showing signs of a broadening recovery. Stronger exports are beginning to be reflected in increased business investment and employment. This suggests that the hoped-for sequence of rebuilding that will lead to balanced and self-sustaining growth may finally have begun. However, the lower profile for oil and certain other commodity prices will weigh on the Canadian economy.
USD/CAD is moving down. Here is the chart:
