What we're seeing in terms of currency movements - and it will probably continue at least over the near-term - is a shift in global monetary policy expectations. There's a gearing-down of expectations for Fed tightening, coupled with increased tightening expectations elsewhere.
If we end up with a majority government you could see a bit of a rally in the currency but it would be short-lived. Canada's economy is comfortably in surplus and that backdrop isn't going to change, no matter who wins.
I don't know anybody out there who is not expecting the Bank of Canada to hike 25 basis points next week.
Most importantly, the Bank of Canada is not giving the impression that it has much of an appetite for further rate hikes beyond the 4 percent level.
The data aren't providing any reason for the Bank of Canada to pause. The risks are on the upside for rate increases. Investors are going to sell bonds.
This report paints a picture very similar to the fall survey and shows an economy practically at full capacity.
Aside from a few small snippets, Mr. Dodge could have transmitted exactly the same message by stating that 'nothing of substance has changed since the (Monetary Policy Report) Update', and leaving it at that.
Dodge said nothing new that he had not already said last week, no surprise there.
Currently, the Canadian dollar has been on a tear, an absolute tear. It's been massively outperforming other currencies.
There's little market reaction I think for two things. First, the strength was anticipated to some extent. Second, the market is very tightly focused on what the Bank of Canada is doing this afternoon.
The strength of today's report certainly will not be lost on the Bank of Canada ... as a result, we still believe the odds favor another rate hike from the bank in April.
Real exports are poised to take a bite out of Canada's growth performance for the first quarter as a whole.
As a result, net exports contributed positively to the accounting of GDP growth in November.
That's not suggesting to me that he sees himself with having a whole battery of rate hikes going forward. I would not be surprised at all to see them go one more time and then pause.
You should see Canada's 10-year bonds rally in the second half of this year. I don't see a big appetite on the part of the Bank of Canada to hike interest rates as the economy slows. There is no compelling reason to go beyond 4 percent.
This is really a tale of two job markets.
The weakness in the Canadian dollar is essentially a follow-through from yesterday's Fed rate decision that has the market anticipating at least one more hike.
This basically confirms their story, so steady as she goes on that front.
They said nothing's changed in their view of the economy so markets focused on the word 'modest' to mean they'll be less aggressive.
This morning's merchandise trade report certainly came as a shocker, but this is one case where the headline looks much worse than the details of the data.
This may be partly a commodity price story.
The Bank of Canada cannot afford to be complacent if it wants to keep inflation in check over its 18-24 month time horizon ... Look for the overnight rate to peak at 4 percent.
It'll be a pretty big increase. It means a lot for consumers and their pocketbooks, obviously - it's going to squeeze their spending power.
So exports actually contributed to net GDP growth in November.
In our view, there is still is every reason for the Bank of Canada to continue to nudge its rate higher, and we are not changing our call for a four per cent (overnight) rate by April.
I don't think they want to commit to any future rate hikes in case things start to sour. They're just leaving all the doors open.
The market is starting to price out some of the rate increases that have been priced in.
