Fri, Jun 02, 2023 @ 22:22 GMT
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Canadian Dollar in Holding Pattern Ahead of GDP

USD/CAD has edged higher in the Friday session. Currently, the pair is trading at 1.3350. On the release front, Canada releases GDP for January, which is expected to remain unchanged at 0.3%. In the US, today’s highlight is UoM Consumer Sentiment, with the estimate standing at 97.8 points.

What’s next for the Bank of Canada? On Tuesday, BoC Governor Stephen Poloz hinted that the BoC would not be raising interest rates in the near future, saying that the Canadian economy had not yet recovered from the huge drop in oil prices. He added that raising interests rates back to "normal" would have a negative effect on the economy and would likely trigger a recession. The last time the BoE raised rates was in 2010, and analysts don’t forecast another hike before 2018. President Trump’s "America first" stance is a serious concern for Canada, which is heavily reliant on open trade. Poloz criticized Trump’s protectionist agenda, saying that "protectionism does not promote growth and its costs are steep".

Since Donald Trump assumed office in January, his administration has been beset by controversy and crises. Trump has yet to provide any details of an economic policy, much to the consternation of the markets. Last week, Trump’s proposed healthcare bill was dead on arrival before even being voted on, a humiliating defeat for the president. This setback has made the markets even more jittery about Trump, and the inquiry into the Trump administration’s links with Russia is gathering steam, which is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but the White House will need to improve coordination with Republican lawmakers to ensure that his next attempt to pass legislation is not a repeat of the healthcare debacle.

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