Interest Rate Hike Is Expected To Be Cloudy To Overcast.

The BOC is expected to tighten monetary policy sooner than market expectations. Cad The dollar rose sharply this week. However, the unexpectedly mild June inflation figures let the central bank breathe a sigh of relief, and at the same time, investors also fell through their glasses. Will the rise of the Canadian dollar end?

On Friday (July 22nd), in the afternoon of New York, the US dollar / Canadian dollar came down after hitting a 0.9528 day intraday high. At present, the exchange rate is basically in the vicinity of 0.9500. The trading day hit a 0.9422 year low of more than 3 years.

　　 Inflation pressure suddenly slowed down, short-term interest rate rises or become a bubble.

Data released by the Canadian Statistical Bureau (StatisticsCanada) on Friday showed that Canada's consumer price index (CPI) fell by 0.7% in June, down 0.2%, an annual rate of 3.1% and an expected increase of 3.6%. After seasonally adjusted, the overall CPI in June decreased by 0.4% compared with last month, and increased by 0.2% in May.

　　 Canada The central bank said in a policy statement Tuesday that due to the continued expansion of the economy, the current excess supply has been gradually absorbed, so some monetary stimulus measures will be withdrawn. In addition, Carney, governor of the Bank of Canada (MarkCarney), stressed again at a news conference on Wednesday that he would withdraw from some "stimulus measures". He believes that the current interest rate level is extremely stimulating. He expects the inflation rate in Canada to stand at 3% of its target ceiling in the short term.

Analysts said that the central bank's statement abandoned the word "final withdrawal", coupled with Carney's radical remarks, and the market's expectation of short-term interest rate rises was rapidly warming. But in June inflation data shattered this idea in an instant.

Sal Guatieri, senior economist at Bank ofMontreal, said: "inflation data in June is relatively mild, which has enabled the Central Bank of Canada to have more flexibility in monetary policy."

Jack Spitz, head of foreign exchange transactions at NationalBank of Canada, Canada, said Canada's June CPI data stunned the market. Earlier, investors agreed that inflation in Canada would gradually intensify. And Carney also said he would gradually withdraw some stimulus measures.

Jack Spitz said the CPI data Much lower than market expectations led to a decline in investor expectations for the Canadian Central Bank's interest rate hike. Investors were selling the Canadian dollar, and the dollar / Canadian dollar staged a standard data market.

　　 Economic growth accelerates the upward momentum of the Canadian dollar.

The Central Bank of Canada released its monetary policy report on Wednesday to reduce its GDP growth rate from 2% to 1.5% in the second quarter, mainly due to the disruption of supply chain caused by the Japanese disaster and the slowdown in government and consumer spending. But the central bank also expects economic growth in the third quarter to be 2.8%, the 2.9% in the fourth quarter, and 2.9% and 2.6% in the first two quarters of next year.

For the inflation situation, the Central Bank of Canada expects that the overall CPI inflation will average 3.4% in the second quarter, and 2.8% in the third quarter and 2.6% in the fourth quarter. And is expected to reach 2% by the third quarter of next year. Core inflation, the central bank expects the second quarter of core inflation will be 1.7%, the third quarter is 1.9%, the fourth quarter will be 2%.

Chris Walker, a foreign exchange strategy analyst at UBS AG, said the US dollar / Canadian dollar was close to a 3 and a half year low, even though investors still preferred Canadian dollar. Walker said investors are looking for reasons to make more Canadian dollars, especially when market risk preferences are at a higher level.

Beijing time 02:30, Canadian dollar / dollar 0.9492/97.