empty
07.09.2022 11:30 PM
The Bank of Canada follows the Fed's strategy. At the same time, it is more frank in its forecasts... and more successful

The Bank of Canada raised interest rates by 75 basis points to a 14-year high on Wednesday, while saying that the discount rate should be higher, given the fight against raging inflation. But unlike the US Federal Reserve, the Bank of Canada is better at restraining markets. And only the fall in oil prices forces the Bank to resort to harsh measures again.

The Bank of Canada follows the Fed's strategy. At the same time, it is more frank in its forecasts... and more successful

The central bank, in its usual interest rate decision, raised the discount rate to 3.25% from 2.5%, matching analysts' forecasts and reaching a level not seen since April 2008. The decision raised rates above the neutral range for the first time in about two decades. "Given the inflation outlook, the Board of Governors continues to believe that the discount rate should be raised even more," the bank said after an unprecedented fourth consecutive major rate hike.

The central bank also said that while headline inflation eased to 7.6% in July from 8.1%, this was due to gasoline prices, with key indicators continuing to rise. Prices in Canada are rising at a rate not seen since the early 1980s.

Obviously, Canadian regulators are more open in their forecasts and less inclined to sweeten the pill like the Fed.

This is not surprising.

Canadian exports fell 2.8% in July, mainly due to lower energy prices and lower consumer goods exports, while consumer goods and energy imports fell 1.8%, Statistics Canada said on September 7.

This was the first decline in Canada's exports in 2022 and the first decline in imports since January, which forced the central bank to tighten lending conditions again.

As a result of the decline, the country's trade surplus with the world fell to 4.05 billion Canadian dollars (3.07 billion dollars), compared with a downwardly revised surplus of 4.88 billion Canadian dollars in June. Analysts had forecast a CAD$3.80 billion surplus.

The value of exports has risen by almost a fifth this year, mainly due to higher prices, but then a sharp decline in prices led to a decline in the value of exports in July.

The data showed that exports of consumer goods in July decreased by 14.3%, and energy products - by 4.2%. In terms of volume, total exports grew by 1.7%.

At the same time, imports fell to 64.2 billion Canadian dollars. According to Statistics Canada, imports of consumer goods have been declining for the third consecutive month, with declines in most subcategories.

A combination of a hawkish stance from the Federal Reserve and a more uncertain outlook for the global economy as the energy crisis in Europe worsens has put pressure on the Canadian currency in recent weeks as well.

Nevertheless, the Canadian dollar has excellent prospects.

Thus, analysts are confident that the Canadian dollar will strengthen in the coming year, offsetting the recent decline against the stronger US dollar, which will be supported by good prospects for the domestic economy and rising interest rates.

If you follow its dynamics, you can see that its decline of about 4% against the safe-haven US dollar since the beginning of 2022 is much less than for all other G10 currencies.

And if risk aversion starts to ease, we may see the Canadian currency start to return to levels more in line with fundamentals. I still think Canada's economy will be slightly better than some of its G10 competitors.

The median forecast in the survey was that Canada's currency would appreciate 1.2% to 1.30 per dollar, or 76.92 US cents, in three months, compared with an August forecast of 1.28. Then it was expected that in a year it would rise to 1.25.

High commodity prices, along with a boom in demand thanks to the easing of COVID-19 restrictions, have helped Canada weather an economic storm that threatens to send many other wealthy countries into recession. Oil is one of Canada's main exports.

In addition, the inflation rate in Canada showed signs of peaking. The Bank of Canada has been one of the most aggressive major central banks in tightening monetary policy.

Money markets and economists expect the Bank of Canada to peak next year at rates between 3.75% and 4.00%. This is not a bad thing, as higher interest rates in Canada are attracting capital inflows that could support the loonie.

In real estate, too, not everything is terrible: soaring house prices in Canada will similarly fall sharply next year. But still, this fall will not be enough to make them affordable, as the Bank of Canada intends to continue to raise interest rates and keep them at a higher level. This is likely to push away some immigrants and slow down economic growth, however, if everything becomes critical, perhaps the government of Canada will take some subsidiary steps in this direction, and the problem will be solved.

Egor Danilov,
Analytical expert of InstaForex
© 2007-2025
选择时间框架
5
分钟
15
分钟
30
分钟
1
小时
4
小时
1
1
通过InstaForex赚取加密货币汇率变动的收益。
下载MetaTrader 4并开启您的第一笔交易。
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

推荐文章

石油價格上限、制裁和試驗。石油成為新的地緣政治焦點

石油重返焦點周三,布倫特原油期貨突破每桶67.5美元,達到八週高位。多個因素促成了此次上升:唐納德·特朗普總統有關與中國達成貿易協議的聲明、美伊緊張局勢再度升溫,以及API數據顯示美國原油庫存減少。

Anna Zotova 16:39 2025-06-11 UTC+2

美元/日元:6月11日初學者交易者簡單交易技巧。昨日外匯交易回顧

當MACD指標已經顯著高於零線時,144.79水平的測試發生了,這限制了該貨幣對的上升潛力。因此,我並沒有買入美元。

Jakub Novak 09:01 2025-06-11 UTC+2

GBP/USD:6月11日新手交易者的簡單交易技巧。昨日外匯交易回顧

當MACD指標已經明顯上升至零線以上時,1.3513水準的測試發生了,這限制了英鎊的上行潛力。因此,我並未購買英鎊,我也沒有在市場中獲得其他進場點。

Jakub Novak 09:01 2025-06-11 UTC+2

歐元/美元:6月11日初學交易者的簡單交易建議。昨日外匯交易回顧

當MACD指標已經大幅上升至零線之上時,1.1440水平的測試發生,這限制了該貨幣對上行的潛力,因此我沒有購買歐元。 中美貿易談判取得進展:昨天,雙方表示已就主要問題達成共識。

Jakub Novak 09:00 2025-06-11 UTC+2

6月11日新手交易者的日內交易策略

歐元的情況比英鎊稍微好一些,因為英鎊受到疲弱勞動力市場報告的壓力影響,在美中貿易談判取得進展後又恢復下跌。 中國和美國之間的貿易談判正在形成新的格局,根據雙方昨天的聲明,已在關鍵問題上達成共識。

Miroslaw Bawulski 08:24 2025-06-11 UTC+2

USD/JPY: 為初學交易者準備的簡單交易技巧(6月10日美國交易時段)

日圓交易評論與交易技巧 當日稍早測試144.68水平時,MACD指標仍然處於賣出區域,因此買入並不是一個選項。 今天來自美國的NFIB小型企業樂觀指數數據不太可能顯著幫助美元對日圓上升。

Jakub Novak 18:39 2025-06-10 UTC+2

GBP/USD:6月10日(美國交易時段)新手交易者的簡單交易提示

英鎊交易回顧與建議 日內早些時候在1.3530的價格測試恰逢MACD指標剛剛從零線往下移動,這確認了賣出英鎊的有效入場點,並使得該貨幣對向著1.3494目標水平下跌。 英國相對疲弱的勞動力市場數據給英鎊帶來了壓力。

Jakub Novak 18:36 2025-06-10 UTC+2

EUR/USD:初學交易者在6月10日(美國時段)的簡單交易技巧

歐元交易回顧及建議 當價格測試1.1398時,MACD指標剛從零線下移,確認了賣出歐元的有效進入點,導致貨幣對下跌了20點。 然而,來自意大利工業部門的正面數據,以及從Sentix指數中反映出的投資者樂觀情緒,使歐元買家抵消了負面影響。

Jakub Novak 18:34 2025-06-10 UTC+2

USD/JPY:6月10日新手交易者的簡單交易技巧。昨日外匯交易回顧

當MACD指標開始從零軸向上移動時,144.21水平的測試發生了。這確認了一個有效的買入美元進場點,而貨幣對朝著144.59的目標區域上升。

Jakub Novak 09:06 2025-06-10 UTC+2

GBP/USD:初學者於6月10日的簡單交易提示。昨日外匯交易回顧

當日下午1.3562水準的測試,與MACD指標剛剛開始從零位向下移動相吻合,這確認了賣出英鎊的有效進場點,並導致該貨幣對下跌超過30點。 今天,我們同樣期待相當重要的勞動力市場數據。

Jakub Novak 09:06 2025-06-10 UTC+2
现在无法通话?
提出您的问题,用 在线帮助.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.