The Bank of Canada monetary policy which was announced on Wednesday yesterday night added a pressure for the Canadian Dollar. That makes the USD/CAD increased by 0.43%.
That reached the level of 1,2697 and continued the strengthening from the trading in a day before. The BoC did not make any changes to interest rates citing an undetened pandemic.
It is also for a build-up in supply weighing on the economic recovery. The BoC's low of 0.25% and its $2 billion-a-week bond-buying program are still being considered the right policy at the moment.
The policy makers thought that the Canadian economy is still having too many capacities. Meanwhile, the recovery still needs the great monetary policy supports.
The Canadian Economy can be Stronger
Canada's central bank also remains expecting that the Canadian economy will strengthen in the second half of the year. It is although a fourth wave and supply problems could cause problems for the recovery.
The commitment to keep interest rates near zero is reaffirmed until the economy is ready to deal with a rate hike. However, that is not expected to happen before the second half of 2022.
The Canadian inflation remained above three percent as expected. They are supported by base-year effects, petrol prices and pandemic-related supply bottlenecks.
However, these factors are quite temporary so far. Persistence and magnitude are uncertain, so the central bank is still committed to monitoring it closely.
The Market Waits for the ECB and Fed Policy
The BoC's dovish statement inevitably weakened the Canadian dollar's position against the USD. The USD itself is excelling against almost all major currencies which are available.
It was judging by the rise of the Dollar Index by 0.18% to 92.70 when this news was written. In terms of fundamental data releases, the America's JOLTs data for July showed a figure of 10.93 million.
That is higher than the expectations of 10.3 million. People have been seeing that the US dollar moved higher as long as the increasing obligation yield in the United States.
The focus now is for the major central bank with the ECB which will be held tomorrow. Meanwhile, the meeting with the Fed will be done at the end of this month.
Meanwhile, the Japan’s cabinet office on Wednesday released the final GDP data for the second quarter. It was revised in a rising position from 1.3% to become 1.9% year – over – year.
The Business Spending Sector is Strong
This figure is better than the forecast of a 1.6 percent increase. On a quarter-over-quarter basis, Japan's final GDP data was revised up from 0.3 percent to 0.5 percent in the second quarter.
That was better than the expectations of a 0.4 percent increase. The business spending sector is firmly monitored despite being overshadowed by the impact of the rise in the Corona Delta virus.
That clouded the economic outlook. The Rising business spending was able to offset the slump in the services sector affected by restrictions in Tokyo and a number of other regions.
Meanwhile, the private consumption, which contributed more than half of Japan's GDP, saw a 0.9 percent increase in the second quarter of this year. That was a good progress.
The Domestic Demand Is also Increasing
In the same period, domestic demand accounted for a 0.8 percent increase in japan's second-quarter GDP revision data. However, the net export sector (export value minus imports) slumped 0.3 percent.
Despite that Japan's final second-quarter GDP data being quite a relief, the economic outlook going forward looks pretty bleak. The dearth of global chip supply in recent months has had a direct impact on the export secto.
That is hampering the Japanese car shipments. Not only that, signs of weakening the economy of China (one of Japan's main trading partners) have worsened the economic outlook.
