The situation certainly doesn’t rival the old MadTV sketches for entertainment value, but a diminished sense of optimism is sapping momentum across the financial markets this morning. The US dollar has run out of velocity ahead of tomorrow’s expected downward revision to first-quarter growth numbers, losing altitude as market bulls hedge themselves against a potential reversal.
Here in Canada, investors are also girding themselves for disappointment when first quarter gross domestic product numbers land tomorrow. The loonie is flirting with a critical resistance level in the mid-1.20’s, after the Bank of Canada’s distinctly dovish outlook knocked the currency down a few pegs earlier in the week. In its rate decision, the Bank effectively put a ceiling on the exchange rate, saying, “The Canadian dollar has strengthened in recent weeks in the context of higher oil prices and a softer U.S. dollar. If these developments are sustained, their net effect will need to be assessed as more data become available in the months ahead”.
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