FX Daily Update
The National Bank of Canada | Sep 22, 2016 09:14AM ET
U.S. Federal Reserve needs additional evidence
To no great surprise, the U.S. Federal Reserve (Fed) left its key rate unchanged yesterday, while taking care to reiterate that it will have to increase in the near future. This leaves two possibilities for such a move this year, with Fed meetings scheduled for November 2 and December 14. Although the Fed does not identify the outcome of the presidential election on November 8 as a potential economic risk, the possibility that certain protectionist measures could be put in place depending on who wins cannot apparently be ruled out. For the moment, the December meeting remains the favourite, with a 60% likelihood of tightening.
North American stock markets and U.S. bonds greeted the news favourably, while the greenback lost ground, shedding more than 1% against our dollar up to now.
Another element that no doubt helped the loonie was the confirmation yesterday that crude oil and gasoline inventories have dropped considerably in the U.S. since last week, driving up WTI oil prices. However, as activity resumes in the most important gasoline pipeline south of the border this morning after a 12-day interruption, there could be a significant impact on future data.
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