For this week’s edition of the Equity Leaders Weekly, we are going to look at two important relationships which can be impacted due to the recent comments from the Central Banks on both sides of the border. We will revisit the recent movement of the USDCAD relationship as well as the relationship between Canadian Long-term Bonds vs. Short-term Bonds.
United States Dollar/Canadian Dollar (USDCAD)
We have recently heard comments from both the Central Banks both in Canada and in the US this week. Some interesting comments were made by the Bank of Canada Senior Deputy Governor Carolyn Wilkins earlier this week stating first quarter growth had been “pretty impressive” and that signs of Canada’s economic growth was broadening. Stephen Poloz, the Bank of Canada Governor, followed up with comments the day after stating their 2015 interest rate cuts “have largely done their work.” Both of these rather hawkish comments have the markets wondering whether the Bank of Canada will be increasing the current low rates sooner than expected which led to increased volatility in favor of the Canadian Dollar this week.