The BoC are unlikely to move inteerest rates today. Oil prices are on the rise following positive discussions with OPEC and oil rich nations such as Iran.
Bank of Canada Governor Stephen Poloz has put away the tools he utilised readily last year. After two interest rate cuts in 2015, he has instead opted this year to wait for effects of the government’s stimulus package to show results.
Essentially, with Canada being a net exporter, he is waiting for the beneficial effects of a cheaper currency to filter into the economy. The Canadian Dollar has been sitting around 10 year lows against the USD for a few years now for this reason.
So no surprises are likely today with rates set to be kept on hold at 0.5% to match their largest trading partner the US.
Oil prices have risen sharply this week following the reinstatement of talks between OPEC (the Organization of Petroleum Exporting Countries) and Russia, both of which agreed to participate in freezing production should the majority of producers all move forward with the plan.
Iran and Iraq have also murmured to be in support of ‘price stability’ measures. This is where most of the excitement has come from the marketplace, given that these talks to reduce oversupply in order to match demand have come a few times over the past year and failed.
Previously, Iran was the major lynchpin. Having only just been introduced to global oil markets once more after the lifting of sanctions against them in affect since the cold war. For this reason they walked out on the previous talks having only just established a new revenue source for the country and were in no mood to take a short-term hit by reducing production. It seems like they may now be more open to persuasion.
Further positive news to come out of the talks should continue to raise the oil price and by association confidence in the Canadian economy so anyone with a CAD buying requirement may be wise to move sooner rather than later.
Rising oil prices could impact the value of CAD in the weeks ahead, call us on 01494 725 353 if you have an upcoming currency transfer youd like to discuss.
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