CAD: BoC on hold for now.
CAD: BoC on hold for now.
BoC Monetary Policy Report underlined the Banks neutral outlook on rates. While short-term risks for inflation stay, the CPI is projected to converge to the core rate of inflation at the 2% target in H2, 2009. GDP growth has been revised lower to 1% in 2008, 2.3% in 2009 and 3.3% in 2010. The Bank judges that the current level of policy rate at 3% remains appropriate. In a separate report, at C$10,717 securities flows surprised market consensus (C$3,500) while topping previous results of C$9,751. Foreign demand for Canadian bonds accelerated. Foreigners acquired long-term debt instruments issued by provincial and the corporate sector. Non-residents purchased C$7.7bn, the largest monthly acquisition in over a year. Non-residents also added smaller amounts of outstanding Canadian bonds and money market instrument to their portfolios in May, statistics Canada says. Canadian investors continued to diversify their short-term foreign investment, buying foreign stocks and foreign short-term debt. While this may signal a pick-up in risk appetite it was not enough to compensate the inflow of capital. We believe that USDCAD should stay in its 0.97-1.02 range for now.
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07-18-2008, 02:12 PM
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