The Canadian dollar was closed flat against the US dollar and the Japanese yen as contradicting signals haven’t allowed the currency to establish a clear trend.Mark Carney, Governor of the Bank of Canada, outlined some downside risks for the economy of Canada in his speech yesterday:
In recent weeks, several downside risks to the Bank’s July Monetary Policy Report (MPR) projection have been realised. The European sovereign crisis has intensified, the U.S. credit rating has been downgraded, and a broad range of data has signalled slower global growth.
Despite the negative factors, Carney expects the economy to expand, albeit with slower pace:
The Bank continues to expect that growth will accelerate in the second half of the year, led by business investment and household expenditures. Ongoing strength in major emerging markets should also help maintain commodity prices at relatively high levels. However, relative to our prior expectations, we expect somewhat weaker economic momentum globally and, as a result, in Canada, with attendant consequences for resource utilization and inflationary pressures.
Canada’s consumer prices, on a seasonally adjusted monthly basis, increased 0.1 percent in July, following the 0.3 percent decrease June from May. On the other hand, on a year-over-year basis, prices for most major components increased at a slower rate in July.
USD/CAD closed at 0.9900, following the slump from 0.9903 to 0.9824, while CAD/JPY closed at 77.25, almost unchanged from the opening price of 77.26. EUR/CAD initially fell from 1.4192 to 1.4131, but later rebounded to close at 1.4252.
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