Major News This Week : January 28, 2013

Last Wednesday, the Bank of Canada surprised the financial markets by stating that even if the key interest rate will eventually increase, rate hikes now were less imminent. Low inflation pressures and lower consumer debt levels were the main reasons for the Bank maintaining its expansionist policy. On Friday, the Consumer Price Index confirmed such analyses, as we learned that inflation fell 0.6% in December. This bad news hurt the loonie, which slipped close to 2% in 3 days. There was better news in the U.S., where Initial Jobless Claims figures continued to decline, coming in at close to 330,000 for a second consecutive week. Lastly, the Bank of Japan announced that its commitment to asset purchases was open-ended and that it was raising its inflation target from 0% to 2%. As a result, the yen was down on the week for the 11th week in a row. Have a good week!


The Loonie
“The soldier’s courage depends on the general’s carefulness” - Publilius Syrus

Our next webinar will look at whether volatility will return to the currency market. But how exactly does 2012 look compare to other years? We have updated our 40-year Yearly Trading Range chart to show changes in the range between maximum and minimum USD CAD rates for the year.


Our first observation is that the new millennium brought about a general increase in volatility. Then we can see that the range was very narrow in 2012. This 816-point range was the lowest observation since 1996 and much less than the median of 981, as well as the average, which was boosted to 1128 by the crisis in 2008. Our second observation is that we have indeed just been through a quiet period; there is no doubt that this has greatly limited the risk of unpleasant surprises over the last 12 months stemming from fluctuations in the loonie’s value.

To Read the Entire Report Please Click on the pdf File Below.