USD/CAD quickly lower
This is a clear shift to a hawkish stance from the Bank of Canada.
- Will assess if all the stimulus in place is still needed as economic growth continues and, ideally, broadens further
- If only a few sectors expand enough to absorb excess capacity, BOC would need to take appropriate action
- Adjustment to lower oil prices is largely behind us, cap ex in oil and gas sector have bounced back
- BOC encouraged by signs that sources of growth are broadening
- Q1 growth figures "pretty impressive"
- Data show that more than 70% of industries are expanding
- Exports were the one disappointment in Q1 figures, working hard to understand the forces behind the data
- Growth in housing prices expected to slow
- Slack in economy still translating into below-target inflation, headline number dragged down by transitory effects of food competition
- Lack of clarity about US policies will remain important uncertainty in BOC projections
- Press release from the BOC
- Full text of the speech
USD/CAD touched 1.3396 on the headlines.
