TechnoMeter

On Monday, Poloz was speaking at the House of Commons when he mentioned that they would sit on the uncertain (i.e. bad) data and wouldn’t act for 18-months as they digested how the two-way economy was performing. USD/CAD immediately sold off on this news falling ~120 pips in a few hours. What surprised many was when Poloz came out a few hours later to clarify his comments that the market misunderstood. The Bank of Canada governor said the comment about inaction was about the output gap and not a forecast of rate direction.



The price of USD/CAD has yet to recover the pre-comment levels near 1.34, but it’s worth noting when a central banker makes an effort to correct the understanding of a statement that resulted in a stronger currency. This could easily be interpreted as thinking a BoC rate cut is more likely than first imagined, which could continue to drag on the value of the Loonie.

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