U.S. job data announced on Friday came in well above analysts’ expectations, leaving the door open now to a Fed rate hike as soon as December. The likelihood of a key rate increase at the next FOMC meeting now stands at 68%. Over the past month, the U.S. dollar has risen against all the main currencies, with gains of 1.46%, 2.39% and 5.06% respectively against the GBP, CAD and the EUR.
According to our Chief Economist and Strategist, the Fed will increase its key rate in December, but then adopt a more dovish tone, which should weigh down the U.S. dollar in the second half of 2016. Given this context, the rising USD/CAD rate in recent days represents an excellent opportunity for exporters to implement hedging for all of next year and leave orders with their dealer.
Bond yields continue to rise while the possibility of upcoming action by the Fed is weighing on emerging markets. Have a great day.
- Range of the day: 1.3225 – 1.3315
Emmanuel Tessier-Fleury