FX Daily Update
The National Bank of Canada | May 25, 2016 09:40AM ET
Investors appear to be gradually coming to terms with the idea that interest rates will be rising in the United States. The S&P 500 climbed 1.15% yesterday, closing the day just shy of the peaks for the month. Renewed appetite for risk appears to have been triggered by a marked interest in the level of U.S. New Home Sales announced yesterday morning. All stock markets are in the green this morning, as are crude oil prices. In North America, WTI has risen above $49 a barrel, the highest level since October 2015. However, the loonie is struggling to find traction, trading essentially where we left off at the end of the day yesterday.
This morning, the main economic news will come courtesy of the Bank of Canada at 10:00, when Governor Polozannounces whether the BoCis adjusting its key rate. Markets expect the rate to remain unchanged. With the Fed constantly beating the drum that rate hikes are in the cards, it is highly likely that the BoCbelieves that the Canadian economy will benefit from a relatively weak currency, removing a substantial amount of pressure on a dovish policy from the central bank.
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