Bank of Canada Tightened the Monetary Policy

Yesterday, the Bank of Canada unexpectedly raised the key interest rate by 25 basis points to 1.00%, which made the USD/CAD quotations drop by more than 200 points. The Central Bank said that the country’s economic growth has significantly accelerated against the backdrop of strong consumer expenditures and the labor market stability. In the near future, representatives of the Bank of Canada will monitor how much the economy is sensitive to higher interest rates.

The US dollar partially recouped losses after the release of positive data on the index of business activity in the nonmanufacturing sector from the ISM. In August, the indicator increased by 2.6% to 55.3. According to the Australian Bureau of Statistics, in July the surplus of the country’s trade balance fell to A$460 million, which is significantly lower than the forecasted value of A$875 million.

At the moment, investors have adopted a waitandsee attitude before today’s ECB meeting. Participants of the financial markets expect comments of the head of the Central Bank Mario Draghi on the significant strengthening of the single currency and plans to reduce the quantitative easing program.

Market Indicators

Yesterday, the major US stock indices closed in the positive zone: #SPY (0.34%), #DIA (0.27%), #QQQ (0.30%).

The 10year US government bonds yield has recovered slightly after a sharp drop since the beginning of this week. At the moment the indicator is at the level of 2.092.10%.

Today we recommend you to pay attention to the following economic reports:

A decision on the interest rate of the ECB at 14:45 (GMT+3:00);Statistics on the labor market in the US at 15:30 (GMT+3:00);The index of business activity in Canada from Ivey at 17:00 (GMT+3:00);Crude Oil Inventories in the US at 18:00 (GMT+3:00).

At 15:30 (GMT+3:00) the ECB press conference will take place.

by JustMarkets, 2017.09.07