USDCAD is moving in Descending channel and the market has reached the lower high area of the channel.
According to the meeting minutes posted on Wednesday, the Bank of Canada decided to raise interest rates rather than keep them at their previous level last month due to the tight labor market and growth that was higher than forecast. The minutes suggested that the Bank of Canada would likely hold interest rates steady at the next meeting, and analysts noted that it showed policymakers were on a less aggressive policy footing than many had expected.
BOC Meeting
The Bank of Canada became the first major central bank to say it would likely hold off on further increases for the time being on January 25, when it announced that it had increased its key interest rate to 4.5%, the highest level in 15 years.
EURCAD is moving in a Ascending channel and the market has reached the higher low are of the channel.
This was also the first time that the Bank of Canada had reached this level. The council makes decisions about policy by reaching agreements among its members rather than holding votes. On Tuesday, Governor Tiff Macklem stated that there would be no need for any more rate rises if, as is anticipated, the economy slowed down and inflation decreased.
Even if it fell to 6.3% in December, inflation is still more than three above the 2% objective set by the central bank. The minutes reveal that the central bank wants to revise its advice following the halt in rate hikes, which it says is essential to measure the effect of eight rate rises in the preceding 11 months. They also outline what the central bank wanted to communicate to the public.
Tiff Macklem Speech
Tiff Macklem, the governor of the Bank of Canada, has stated that although a slowing economy may not appear to be a positive thing at first glance, it actually is when the economy is overheated. Macklem predicts that the economy would continue to slow down as a result of the falling demand for products and services.
The Bank of Canada has begun one of the most rapid rounds of monetary policy tightening in its long history in an effort to achieve its goal of slowing down the domestic economy. It has increased its benchmark interest rate for the eighth time in a row since March, bringing the total increase from close to zero to 4.5 percent.
GBPCAD is moving in a Ascending channel and the market has reached the higher low are of the channel.
On the other hand, the governor of the Bank of Canada stated that the central bank is prepared to hike interest rates even more if inflation proves to be more tenacious than anticipated. Since reaching its highest point of 8.1% in the summer, Canada’s inflation rate has begun to decline, thanks to a drop in the price of gasoline and improvements made to supply chains.
Canada Wages
Even while wage growth has been picking up speed for the past several months, it is still lagging below the pace of inflation. Paychecks increased by 5.1% year over year in December. A more obvious slowing in price increase over the past several months has provided economic analysts with cause for optimism, despite the fact that annual inflation is still at levels not seen in decades.
CADJPY is moving in Descending Channel and the market has retested from the lower high area of the channel.
According to projections made by the Bank of Canada, the annual inflation rate will drop to three percent by the middle of the year and will reach two percent in 2024. An economist working for Desjardins named Royce Mendes stated that Macklem is keeping his fingers crossed that the rate rises he has already undertaken would be sufficient to achieve his goal.
He states, “The head of the Bank of Canada seems quite comfortable sitting on the sidelines even as his U.S. counterpart will be discussing the need for further monetary tightening south of the border. All governing council members acknowledged they were approaching this decision with a similar view: that the bank’s monetary policy to date had been forceful and that the full impact would be felt in quarters to come.”
Canadian Healthcare
To assist the struggling healthcare system in Canada, the government of Canada has committed to providing almost C$200 billion ($149 billion; £124 billion) in financing over the next ten years. In a statement made on Tuesday, the financing was presented as a generational solution to the system’s problems.
AUDCAD is moving in Ascending Channel and the market has broken from the higher low area of the channel.
The healthcare industry in Canada has been struggling for some months with staffing shortages and high wait times for patients seeking treatment. Since then, a few accounts have surfaced of individuals who passed away while they were waiting to receive care. All hospital and doctor visits that are deemed medically essential in Canada are provided to citizens and permanent residents of the country at no cost as part of the country’s publicly subsidized healthcare system.
It is managed at the municipal level despite being paid for using a combination of funds from the federal government and the provincial government. Approximately one-quarter of the total financing comes from the national government via the Canada Health Transfer.
Deflation Chances
When the economy is performing poorly, it is normal for people to anticipate deflation. However, the Bank of Canada pointed out that respondents who stated they are predicting deflation are less likely than other Canadians to anticipate a recession in the next twelve months. This was one of the conclusions drawn from the survey.
Crude Oil is moving in Descending Channel and the market has fallen from the lower high area of the channel.
These respondents were more inclined to assume that interruptions in supply chains were the source of inflation than any other explanation. Many of them feel that prices that climbed quickly will fall once the transitory factors that are causing inflation to rise will no longer exist. In spite of the fact that James Orlando, director of economics at TD, believes that deflation is not likely to occur in the near future, he believes that there is some validity to what these respondents are thinking.
“As supply chains ease, and they’re easing very quickly right now, we’re going to start getting more and more discounting. The reason why we don’t think total inflation is going to be sustained in a negative territory is because you got to consider that the economy isn’t just goods, but it’s also services. Business would have to be in really bad condition for firms to be cutting their prices. And if they’re in that situation, they’re probably cutting workers.”
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