Hawkish BOC set to keep Canadian dollar riding high into 2022
BNN Bloomberg
The Canadian dollar is closing out 2021 as the only major developed-market currency to advance against the dollar, and a hawkish central bank in Ottawa should support the loonie further in 2022.
The Canadian dollar is closing out 2021 as the only major developed-market currency to advance against the dollar, and a hawkish central bank in Ottawa should support the loonie further in 2022.
Markets expect the Bank of Canada to be one of the G-10’s most aggressive monetary authorities in tightening policy next year. Traders are currently pricing in five 25-basis-point rate hikes in 2022. The BOC upped its hawkish rhetoric in the latter part of 2021, as inflationary pressures became a primary concern for Governor Tiff Macklem.
That pivot should continue to help the loonie, even against its cross-border counterpart, which it’s beaten for three straight years, according to Scotiabank’s Juan Manuel Herrera.
“While we see the BOC and Fed both hiking by 100bps next year, we think the BOC will hike at a faster pace through 2023,” he said. “So shorter-term rates will act as a solid support for the CAD.”
A New Year’s Eve rally helped push the Canadian dollar over the edge to first place in G-10 FX, making the loonie an outlier among its peers following a banner year for the greenback, which posted its largest yearly gain since 2015. On top of monetary policy, the loonie also found support in commodities, as crude oil prices had their best 12-month run since 2009.
The Bank of Canada’s release of its deliberations concerning its latest interest rate decision shows how complex these considerations can be, according to an economist.
As interest rates climb, variable-rate mortgage holders are paying thousands of dollars in added interest compared to people with fixed rates.
The Bank of Canada was watching its words at its last interest rate announcement, in fear of spurring speculation that rate cuts are coming any time soon.
Housing prices across Canada rose in August, marking their sixth consecutive monthly rise, according to new data from the Teranet-National Bank House Price Index.
A new RBC survey suggests financial uncertainty has become the new normal for many Canadians as inflation eats into their savings and hampers their future financial security.
The U.S. Federal Reserve is set to leave its key interest rate unchanged Wednesday as it seeks to guide the U.S. economy toward a “soft landing" of cooling inflation without triggering a deep recession.
Oil fell as the market's breakneck rally that pushed prices to US$95 a barrel on Tuesday took a breather.
Workers at Ford Motor Canadian unit avoided a strike, reaching a tentative agreement late Tuesday after extending negotiations by 24 hours from a previous deadline.
A new survey suggests that most Canadians feel news should be free and accessible for anyone, while also believing that media will find other ways to make money.
Amazon.com Inc. says it is ramping up to hire more than 6,000 people across Canada.
Bank of Canada deputy governor Sharon Kozicki says swings in the inflation rate are to be expected in a speech coming after the latest consumer price index report showed inflation climbed in August for the second month in a row.