• BoC Governor Poloz speaks in Ontario
  • Strikes dovish tone “downside risks to inflation”
  • Canadian dollar hit with wave of selling and trades lower across the board

There’s been a fairly sharp move lower in the Canadian dollar this afternoon following  a speech from Bank of Canada (BOC) Governor Poloz in which he adopted a more dovish than expected tone. 

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 USDCAD has jumped around 80 pips since the speech began with the CAD falling lower. Source: xStation

Delivering a talk at the Queen’s University in Ontario titled “Today’s labour market and the future of work” Poloz made the following comments:

  • There is a degree of untapped potential in the economy
  • It is not much of a stretch to imagine that Canada’s labour force could expand by another half a million workers
  • Labor market as become a ’good deal’ healthier over the past year but some slack still remains
  • Monetary policy remains particularly data dependent
  • The Canadian economy is carrying untapped potential that could prolong the expansion without causing inflationary pressures

The last statement in particular is pretty dovish and it is clear the market has taken the event as a dovish shock. The Canadian dollar is the worst performer in G10 space and is sliding across the board. The largest losses can be seen against the NZD and GBP with both of these higher by 1.0% or more against CAD.

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 CAD has dropped pretty sharply following these comments and is trading lower across the board. Source: xStation