Deputy Gov. Timothy Lane of the Bank of Canada
The Deputy Gov. of the Bank of Canada Timothy Lane is speaking and says:
- global economic uncertainty likely to persist even if US and China reach a trade deal
- global uncertainty is likely to have a lasting effect: questions remain about whether market pricing fully reflects risks
- tone of developments in recent weeks gives bank more confidence in its October outlook for growth and inflation
- notable economic strengths and on target inflation mean Canada is resilient but it is not immune
- damaging effects of trade conflict are only partially offset by easier monetary policy
- recent data augur well for households financial situation and future spending, although consumer confidence has been softening
- heavy household borrowing creates vulnerabilities that could amplify any negative shock to the economy; lowering rates further could make vulnerabilities worse
- Canadian employment wage growth data suggest labor market is continuing to tighten
- support from higher spending by provincial governments expected to Wayne in 2020 as consolidation in Ontario and Alberta takes hold in recent straight then BC and Québec normalizes
- there is no reason for the Bank of Canada to move in step with the US Federal Reserve when it comes to rate moves
- diversion's between monetary policies of Bank of Canada and US Fed is not as stark as sometimes pretrade
- in hindsight moves in Canada and US toward balance budgets starting in 2010 were premature
The USDCAD has tilted to a new session low on the comments. Although Lane is cautious, he is positive on current economy
The USDCAD today has fallen below its 50% retracement of the move up from the October low to the November high at 1.31842 (see daily chart below). The pair tumbled below its 200 day moving average and 100 day moving average in trading yesterday, and broke away from the 74 pip trading range that had contained the pair over the previous 11 trading days. The 50% retracement level is close risk now for sellers. Stay below keeps the bears firmly in control. More conservative risk is the 100 day moving average for shorts.
