Canadian dollar: It is an amplitude against the U.S. dollar and a test of its robustness against the Japanese yen
2023-03-01
■ Bank of Canada (BOC) is likely to keep the policy rate unchanged at its March meeting to determine the cumulative effect of rate hikes
■ The Canadian dollar fluctuated repeatedly against the US dollar in the low range, and the mid-line level of 101 yen against the Japanese yen is a turning point for the strengthening of the Canadian dollar
In Canada, employment rose by 150,000 month-over-month in January, showing a marked increase in the number of regular employees. On the other hand, the growth rate of the consumer price index (CPI) in the same month slowed to 5.9% from the previous year, affected by the decline in mobile phone service charges and the narrowing of the increase in passenger car prices. The CPI is judged to have peaked last June (8.1%) despite continued increases in food prices and mortgage rates.
The quarterly monetary policy report released by the Bank of Canada (BOC) at its January 25 meeting predicts that the CPI will fall back to 3.0% in mid-2023 and return to around the central bank’s target (1-3%) in 2024. In the minutes of the meeting published on February 8, they confirmed that they agreed that it was appropriate to hold off on raising interest rates. Although BOC President Macklem emphasized that "stop raising interest rates is conditional", the Bank of Canada stated that it would assess the cumulative effect of raising interest rates. At the meeting on March 8, it is very likely that the policy interest rate will be fixed at 4.5%. At present, with the tight labor supply and demand, service prices remain high, and the resumption of economic activities in China has led to an increase in commodity prices, in the latest financial policy report released at the meeting on April 12, whether the BOC will revise the price The predictions are high profile.
According to market forecasts, the real GDP in the October-December quarter of last year announced by Statistics Canada on the 28th increased by 1.5% compared with the previous quarter, expanding for six consecutive quarters, but the growth will slow down from the previous quarter (year-over-year growth of 2.9%). Against the background of high prices and rising interest rates, personal consumption and housing investment will continue to decline, and the growth rate is expected to slow down. The Canadian dollar is expected to fluctuate between 1.3300 Canadian dollars and 1.3800 Canadian dollars against the US dollar in March. On the other hand, the exchange rate against the yen has maintained its strength from 97.50 yen to 101.50 yen. If it breaks through the December 13, 2018 high of 101.42 yen, if it clearly exceeds the high price of 101.42 yen on December 13 last year, there will be a sense of bottoming. It will expand, and the tone of the appreciation of the Canadian dollar and the depreciation of the yen will also increase.