Forex Investment and Currency Trading

The Bank of Canada delivered one last 25bps rate cut today to leave the overnight rate at an effective floor of 0.25%.
 
Using a surprising degree of transparency, the Bank stated that it will leave the overnight rate there until June 2010 to flatten the yield curve.
 
The Bank also downgraded its economic forecasts for both 2009 and 2010.
 
The comments on policy alternatives did not include much detail, but they opened the door to quantitative easing and market expects more on that front when the Bank releases the Monetary Policy Report on Thursday.
The Bank of Canada cut the overnight rate by 25bps [...]

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As widely expected, the Bank of Canada (BoC) lowered the overnight rate target by another 50 basis points to ½% today. The bank also correspondingly reduced the operating band for the policy rate and cut the Bank Rate to ¾%. The BoC judged that the global economic outlook deteriorated further since the January Monetary Policy Report Update (MPRU), and the U.S. recession presented greater challenges for Canada. Central bank officials noted that fourth quarter 2008 real GDP undershot their projection and that potential delays in stabilizing the global financial system and more substantial weights on domestic demand would push the [...]

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Economics: Heading into the March 3rd FAD, the economic data has confirmed the rather rapid deterioration in the Canadian economy, complete with evaporating price pressures.  There has been a steady stream of disappointing data that confirms the economy quickly unravelled in the fourth quarter as not only the domestic drivers of growth contracted, but so too did the external drivers succumb to the recession in the U.S. The last piece of the puzzle will be Monday’s official Q4 GDP data, which is expected to post a 4.2% Q/Q ann. decline. Moreover, improvement in the credit market has been slow and [...]

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Economic: The Canadian economy is now well into what is expected to be its most severe economic recession since the early 1980s, and all indications are for a rather sizeable drop in economic activity in November. In fact, with retail sales, manufacturing sector shipments, wholesale trade and housing sector activity all declining in dramatic fashion during the month, and export demand for Canadian products falling by the day, it appears that all segments of the Canadian economy are being whiplashed. For November, analysts expect GDP to fall by a massive 0.6% M/M, which will be the first back-to-back monthly drop [...]

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