We’re going to keep writing about today’s BoC rate hike because as noted earlier, it’s more important than most stories that contain the word “Canada.”
The BoC hike is important. Poloz is effectively being used as a guinea pig by DM central bankers to see what happens when you hike rates in the post-crisis era. And if you’re a market watcher in the U.S. or Europe, you should take note of what the TSX did as soon as the decision came down.
This wasn’t entirely unexpected given the hot economic data that’s been coming in fast and furious over the past couple of months, but it is extremely notable coming after the July hike.
To be sure, whatever you thought was going to dominate the news flow in the week ahead is probably going to take a backseat to North Korea, for obvious reasons.
But North Korea isn’t the only thing on traders’ minds this week. Not by a long shot.
Y/Y, Canada’s economy grew by 4.6% in the 12 months through the end of May. That’s the highest growth rate since the millennium!
And thus ends one of the most painful chapters in the history of spec positions gone horribly wrong.
“Nominal home prices in Canada have grown by 13% over the past year, and by 200% since 2000. These sharp increases in home prices in Canada have invited comparisons with the US housing market in the period leading up to the Global Financial Crisis.”
Well with the release of the latest CFTC data, we learn that a long, and exceedingly painful chapter for CAD shorts has (almost) come to an end…
Well, the message from Yellen was heard loud and clear and amusingly, so was the message from Stephen Poloz. In fact, you’d be forgiven for thinking they coordinated to make sure one offset the other. The BoC hiked, as expected, but “expected” is a relative term here. Because the whole abrupt shift in rhetoric that culminated…
“The Loonie is streaking higher like a Canuck on a breakaway, and suddenly, all the Canadian Dollar bears are strangely silent.”
Canada Raises Rate to 0.75%, Says CPI Softness Is Temporary
BOC: “current outlook warrants today’s withdrawal of some of the monetary policy stimulus in the economy”
“I’m also outraged.”
Ok, well this should be an interesting week. We’ll get the BoC, which will make Bloomberg’s Luke Kawa happy because it means Canada will be in the spotlight for once. He’s got some fun Canada-themed socks we imagine he might wear on Wednesday. “The recent avalanche of hawkish messages from the BoC, as well as…
“I find it funny how with all this printing, market participants are surprised when the price of assets rise.”
SocGen’s Kit Juckes probably summed up the overnight session best: Overnight currency drivers have been a pretty eclectic collection of unrelated developments. That sounds like it could be an ill-advised sequel to “A Series Of Unfortunate Events“: “A Pretty Eclectic Collection Of Unrelated Developments.” First there’s the kiwi which collapsed. That comes courtesy of the…