News Column

Markets reacts to BoC

July 17, 2014

Yesterday's market reaction to the Bank of Canada interest rate announcement, Monetary Policy Report and Press conference was a prime case of "sell the rumour, buy the fact". The "buy-the-fact" camp clearly won on the day as the U.S. dollar quickly challenged 1.0790 Canadian on the initial announcement then retraced throughout the following events to settle around 1.0750 Canadian. The loonie will now be swayed by larger themes in the market as there is limited data today, and tomorrow's Consumer Price Index will be largely ignored following the central bank discounting recent pressures yesterday. Experts expect a range today of 1.0720 to 1.0780 Canadian The euro opened flat near yesterday's close. Euro-zone CPI for June came in unchanged at 0.5% y/y. The focus now turns to central bank policy. One European Central Bank member reiterated similar comments from his fellow members, stating that Quantitative Easing is not immediately necessary while maintaining a focus on recent measures. The euro opened at 1.4533 Canadian this morning. Observers expect a range today of 1.4500 to 1.4575 Canadian The pound is weak this morning, down 0.23% from yesterday's close. The sterling's strength was short-lived after the currency broke a new two-month high yesterday before weakening and closing at 1.8366 Canadian. There are no new domestic data releases for the rest of the week. The pound is currently trading at 1.8368 Canadian. The Australian dollar is still holding onto last Friday's strength and is strong moving into the North American session. There are no new event risks this week and the Aussie is currently trading at 1.0078 Canadian. The New Zealand dollar is weak and continuing its downward trend, breaking a new weekly low this morning. This would mark its fourth consecutive day loss and is currently trading at 0.9345 Canadian. Data Releases CAD: No data AUD: No data EUR: No data GBP: No data JPY: No data NZD: No data USD: Building Permits + Unemployment Claims + Philly Fed Manufacturing Index

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Source: Baystreet Stocks to Watch (Canada)

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