Market Analytics and Considerations
Key Notes
- The Canadian currency drops 0.2% against the US dollar.
- Trades between 1.3635 and 1.3683
- U.S. oil prices increase by 1.8%.
- The yield on Canadian bonds declines across the inverted curve.
As investors awaited the Bank of Canada governor’s participation in a fireside chat for any hints on the possibility of further rate hikes, the Canadian currency fell versus the US dollar on Monday, approaching a multi-week bottom.
The BoC increased its benchmark rate last Wednesday to 4.25%, the highest point in over fifteen years, and has stated that it will review the most current economic statistics to determine whether to do so again.
At its next policy meeting on January 25, the central bank is expected to increase interest rates by 25 basis points, according to the money markets.
At 3:25 PM ET, Governor Tiff Macklem is scheduled to deliver her prepared speech (2025 GMT).
After fluctuating between 1.3635 and 1.3683, the Canadian dollar was trading 0.2% weaker at 1.3675 to the dollar, or 73.13 U.S. cents. At 1.3699 on the last Wednesday, the exchange rate dropped to its lowest point in approximately 5 weeks.
According to statistics released on Friday by the U.S. Commodity Futures Trading Commission, investors have increased their betting against the Canadian dollar to the top level in eight weeks. Net short positions were 22,090 contracts as of December 6 compared to 16,116 contracts the previous week.
Investors waited for the final wave of transoceanic hikes in interest rates this year from a triad of central banks, including the Federal Reserve, and the U.S. dollar sagged in anticipation, expecting that a previously rapid pace of increases in cost of borrowing will eventually show signs of slowing down.
Having followed several weeks of falls, the price of crude oil, one of Canada’s main exports, increased 1.8% to $72.33 per barrel.
The yields on Canadian government bonds decreased across a more pronounced inversion slope. The 10-year fell 5.4 basis points to 2.828%, while the 2-year slid 2.7 basis points to 3.824%.
