The Canadian dollar is trading at its highest levels in more than three months following yesterday’s Bank of Canada policy meeting. Chairman Poloz and company took a more hawkish turn with this quarter’s Monetary Policy Report as the market keyed in on comments that the recent oil shock would dissolve sometime in the second half of 2015. The Central Bank also upgraded local growth forecasts and pinned its fortunes to those of the US economy, which is expected to expand over the next few quarters. It remains to be seen whether or not this rally will be sustained though, as the central bank noted the importance of “non-energy exports.” Mr. Poloz noted this sector will play a large role in 2015 as demand remains high amid a weaker currency with especially strong demand from the US. Another rate cut is not out of the question this year.
Overseas, the euro has jumped more than 1% since yesterday’s ECB press conference, as Mr. Draghi and company pledged to fulfill its 1 trillion-euro bond buying program. Despite a confetti protest, the European Central Bank explained that its QE program would continue amid recent economic “green shoots”, pushing yields to all-time lows and moving the euro to its level in over a week. While economic data remains limited this week, Greece remains the big news story for markets. In spite of an FT story reporting Greece had to be restrained from asking a delay in repayments, the euro is on the rise this morning. European Commissioner Dombrovskis made comments earlier today that he expects an upward revision of EU growth forecasts, as mainland Europe continues to heal.
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