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It’s a Big Day for the Loonie, with the Bank of Canada and Monetary Policy in Focus

The Bank of Canada and the Loonie are in focus, with economic data on the lighter side elsewhere…
Bob Mason
Bank of Canada

Earlier in the Day:

It was another relatively quiet day on the Asian economic calendar this morning. Key stats included January consumer confidence numbers out of Australia.

While the Aussie was under influence, risk appetite returned in spite of the rising risk of a global coronavirus outbreak.

Even if it’s not a global killer, countries shutting borders would impact travel numbers that weigh on global equity markets.

For the Aussie Dollar

The Westpac Consumer Sentiment Index fell by 1.8% to 93.4 in January. In December, the index had fallen by 1.9% to 95.1.

According to the latest Westpac Report,

  • The bushfires reportedly contributed to the downside. The currently low levels in consumer confidence are consistent with lackluster consumer spending figures.
  • Despite upward momentum in the equity markets and improved sentiment towards the global economy, all the economic components of the index declined.
  • The economy next 5-years sub-index fell by 3.7%, with the economy next 12-months falling by 5.4%.
  • Falling by 1.8% the time to buy a major household item sub-index will also be a concern for the RBA.
  • It wasn’t all doom and gloom, however, with the finances vs a year ago sub-index rising by 0.7%.
  • ‘Finances, next 12-months’ sub-index increased by 0.9%, though both were still down from a year ago.
  • The Unemployment Expectations Index fell by 1.9% to 134, whilst still up by 8.4% on this time last year.
  • Sentiment towards housing improved, with the ‘time to buy a dwelling index’ rising by 5.7% to 118.8, close to its long-run average of 120.0.

The Aussie Dollar moved from $0.68478 to $0.68466 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.10% to $0.6838.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.11% to ¥109.99 against the Greenback, with the Kiwi Dollar down by 0.14% to $0.6588.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar, with no material stats due out of the Eurozone later today.

The lack of stats will leave the markets to look ahead to tomorrow’s ECB monetary policy decision.

At the time of writing, the EUR was down by 0.02% to $1.1080.

For the Pound

It’s a quieter day ahead on the economic calendar, with economic data limited to January’s CBI Industrial Trend Order numbers…

We’ve seen plenty of sensitivity to the CBI numbers since the EU referendum result, so expect more of the same later today.

At the time of writing, the Pound was down by 0.03% to $1.3046.

Across the Pond

It’s a relatively quiet day on the data front, with stats limited to December existing home sales figures.

With inventories a major influence, we expect the numbers to have a muted influence on the Dollar.

The focus will continue to be on Davos and the Oval Office.

Extradition hearings got underway this week, with Meng Wanzhou facing the prospects of being sent to the U.S. Beijing will likely respond to any ruling in favor of extradition.

The Dollar Spot Index was up by 0.12% to 97.652 at the time of writing.

For the Loonie

It’s a big day ahead on the economic calendar. While wholesale sales figures and house price figures are due out, the focus is on the Bank of Canada…

Recent GDP numbers support a more dovish outlook, but with the USMCA now in place, there’s the hope of better days ahead. Uncertainty over the Bank of Canada’s stance pressured the Loonie in the early hours, however.

December inflation figures are also due out ahead of the BoC decision, which will garner some interest.

The Loonie was down by 0.15% at C$1.3090 against the U.S Dollar, at the time of writing.

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