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Canadian Bonds Increase As The Loonie Retreats

ByThe National Bank of Canada
Published 01/27/2013, 06:35 AM
Updated 05/14/2017, 06:45 AM

The Bank of Canada did not budge, which came as no surprise. However, the change in its tone was unexpected: the BoC stated that rate increases announced in months past are less imminent, which caused the valuation of Canadian bonds to increase and the loonie to retreat.

Further to this shocking announcement, our dollar lost nearly 1% in just a few minutes and this trend continued, to a lesser extent, overnight. Canadian exporters can take advantage of more attractive conditions this morning. It would be wise to do so, to cover part of their selling, because gradually rising oil prices represent strong support for the loonie which could use this situation as a springboard.

South of the border, the vote to extend the national debt limit easily passed with a vote of 285-144, including 111 Democrats against! The next issue on the table will the budget by April 15; according to the requirements submitted by Republicans, without a budget, representatives’ salaries will be cut. More turbulence is in the offing, but meanwhile, the markets are breathing easier.

The IMF lowered its global economic growth forecasts but it assessed that risks for a recession have also dropped. Manufacturing numbers came out better than expected in both eurozone and China, where the Purchasing managers index reached a two-year high.
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