- The market took Bank of Canada Governor Stephen Poloz's speech as dovish, and the Canadian dollar continues its decline falling over 0.7% today.
- His choice of topics softened the interest rate outlook amid a tight labor market, and a heated trade debate going on across the border.
- "..while most other population groups have seen their participation rates recover from the Great Recession, that has yet to occur for young Canadians,” Poloz said on labor force participation rates.
- The NAFTA negotiations are another major factor deteriorating rate expectations given the real risk of the free-trade deal being scrapped.
- "In a scenario in which NAFTA is actually scrapped, we would expect USD/CAD to adjust significantly higher, likely by double digits in percentage terms, as a first order effect," says Ben Randol, an FX strategist at BofA.
- FXC -0.8%
- Now read: Markets Look For A Second Opinion On U.S. Inflation
Original article