NY Open: Why the Bank of Canada fears the trade war
FX Trader, Loonieviews.net
Summary: Bank of Canada governor Stephen Poloz is out warning that an escalation of the US/China trade war would create a burst in inflation that central banks would find difficult to contain.
BoC governor Stephen Poloz warned in a Globe and Mail interview that an escalation of the US/China trade war such as an increase in tariffs to 25% would create a burst in inflation that central banks would find difficult to contain. Closer to home, the BoC is still concerned about the impact of low oil prices on the Canadian economy. WTI oil broke below $50/barrel yesterday, touched $47.87/b in Europe and is trading at $48.58/b. USDCAD hovered around 1.3400 in early trading but climbed to 1.3427 when Canada October Manufacturing Shipments were -0.3% m/m. (Forecast 0.4%)
The greenback managed to claw back some of its overnight losses in New York trading helped by a better than expected housing report. November Housing Starts rose 3.2% compared to October's revised negative 1.6%.
Wall Street bounced at the open recovering around half of yesterday’s drop in a few minutes. The question is “will it last?” December has seen many days when opening gains became closing losses. Today’s Wall Street Journal editorial urges the Fed to take a prudent pause in raising rates.
President Trump agreed and tweeted “I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!”
Traders may be buying stocks in hopes that the Fed heeds the Trump and WSJ suggestions.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
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