Daily Market Update

Bank of Canada Expected to Tighten, U.S. Dollar Recovering

January 17, 2018

The U.S. Dollar recovered further ground overnight, gaining enough just to cover some losses experienced thus far this year.


It seems like there has been progress in Congressional negotiations to provide a short-term funding bill to February 16th as the budget will also be tied to other policies such as the Dream Act that require more debate and compromise.

The swings for the dollar seem to be tied to the slowdown in risk-appetite as equities hit the brakes and the world of virtual currencies has been hit with regulatory scrutiny.

Industrial Production met expectations, but thus far no impact. Fed official Charles Evans will be speaking at 10AM. We shall see if central banks indeed can move markets as the Bank of Canada is set to announce its decision at the same time. Rates are expected to be hiked with economists 90.0% sure of such a move.



The Euro is still trading near its best levels since the end of December of 2014, but is slowing down a bit on its surge with a few uncertainties tied to the politics of the region. Not only is Germany a concern because of its need to have a governing coalition, but Italy may also be headed towards some issues.

The country will have a general election on March 4th, but there will be plenty of familiar faces to the Italian public, especially in the form of tycoon and former head of state Silvio Berlusconi. Some experts explain that there seems to be an air of nostalgia about the man, but others worry it could be the return of corruption and favors. The Euro-zone’s third largest economy has failed to impress economically, experiencing contractions in its indicators throughout 2017.



The Canadian Dollar could experience major moves today depending on the Bank of Canada’s decision to hike or hold back. The overnight interest rate stands at 1.0% as of now after two hikes the year prior. Canada was the first advanced economy after the U.S. to have its bank increment borrowing costs following a streak of gross domestic product growth. The almost-guaranteed interest rate increase today could mean a break for the “Loonie,” which has conceded ground recently because of fears that NAFTA could be abandoned by the U.S.


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