USD/CAD slumped overnight:
- The Canadian dollar stole the spotlight on Monday. Wilkins wasn't even on most calendars but she dropped a big hint about a major policy shift towards something explicitly hawkish. USD/CAD was very slow to react at first but then word spread and it dropped to 1.3334 from 1.3462. Note that specs are long the pair and in danger of a big squeeze.
More here: BOC's Wilkins: Will assess whether all the stimulus in place is still needed
In brief ... a clear shift to a hawkish stance from the Bank of Canada.
- Will assess if all the stimulus in place is still needed as economy 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"
USD/CAD may have eaten something dodgy ...
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Carolyn Wilkins is Senior Deputy Governor of the BOC
