Major News This Week

We saw a slight reprieve last week on the currency market volatility front compared to the last 4 weeks. Indeed, the events with high potential volatility that were expected last week, as the first rate decision of the incoming governor of the Bank of Canada and the two speeches delivered by Mr. Bernanke did nothing to disturb the slumber of the markets. In Canada, Mr. Stephen Poloz decided to maintain the course set by Mark Carney before his departure for London. In the U.S., Mr. Bernanke was eagerly questioned by the House of Representatives on Wednesday and the Senate on Thursday regarding the monetary policies employed at the Fed. Bernanke essentially reiterated the same points at his speech in Boston two weeks ago. The effect on the U.S. dollar was therefore muted. Have a good week!


The Loonie
“We cannot solve our problems with the same thinking we used when we created them.” - Albert Einstein
Recent positive data on Canadian securities transactions highlights the important role foreign purchases play when providing support for the Canadian dollar. Despite investor’s lack of appetite for equities, federal and corporate bonds have generated enough sales to bring net transactions for Q1 of 2013 to the highest level since Q3 of 2010 and were dominated by the corporate sector which sold $14.2 billion worth of paper to foreigners (a record amount for a first quarter)1.

Aside from negative headlines surrounding the potential economic downturn in Canada, geopolitical concerns provided support for oil, as prices have closed higher for three consecutive weeks. Given the reliance of the Canadian economy on the demand for commodities, foreigners continued their purchases of Canadian securities.

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