Article Highlights

  • BOC kept interest rates unchanged at 0.50% as expected
  • BOC: Q4 growth to moderate after Q3 rebound
  • BOC: Business investment and non-energy exports still weak
  • U.S. crude oil inventories down by 2.4 million barrels
  • U.S. JOLTS job openings down from 5.63M to 5.53M
  • RBNZ Gov Wheeler: Likely done cutting rates as economy grows
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The BOC was the star of the show in the latest forex performance with their policy statement, but RBNZ head Wheeler managed to throw in a solid encore number as well.

Major Events:

BOC interest rate statement – As expected, the Bank of Canada kept interest rates unchanged at 0.50% in their latest policy decision, citing that growth has been in line with their expectations. However, they hinted that Q4 growth is likely to be weaker compared to the rebound seen in Q3 as business investment and non-energy exports are still lagging.

Central bank officials also highlighted rising bond yields in Canada as a spillover effect of the U.S. elections and the pickup in consumption growth due to the new Canada Child Benefit. They also noted that inflation is still running below expectations due to lower food prices but that the Loonie’s depreciation is helping keep domestic price levels afloat.

RBNZ Governor Wheeler’s testimony – In his speech titled “Some Thoughts on New Zealand’s Economic Expansion,” RBNZ Governor Wheeler reiterated that they might not need to cut interest rates again anytime soon. He explained that “prospects look good for continued strong growth over the next 18 months” and suggested that upward pressures on the Kiwi might no longer be a huge concern.

This marks a slight shift in Wheeler’s previous stance wherein he emphasizes how the local currency is overvalued and that this is dampening inflation. Still, he mentioned that the central bank is still keeping close tabs on developments in the property sector to assess how house price gains might impact financial stability.

Major Market Movers:

NZD – The Kiwi soared late in the trading session as Governor Wheeler grabbed the mic and reminded traders that the RBNZ might keep rates on hold for some time.

NZD/USD popped up from .7146 to a high of .7180, NZD/JPY climbed from 81.25 to a high of 81.70, EUR/NZD fell from 1.5021 to a low of 1.4913, and GBP/NZD is down to 1.7525.

Watch Out For:

  • Tentative: Chinese trade balance (307B CNY expected, 325B CNY previous)
  • 12:30 am GMT: Australian trade balance (-0.72B AUD expected, -1.27B AUD previous)

See also:

London Session Recap

Asian Session Recap

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