BoC: CAD is hurting exports, recovery at very difficult stage

Ross J Burland FXStreet

Canada's recovery from the pandemic is at a very difficult stage and a second wave of COVID-19 infections "could even deepen the economic hole", Bank of Canada Governor Tiff Macklem said on Tuesday.

Reuters reports

Macklem told the Greater Vancouver Board of Trade that Canada had to boost both exports and productivity to ensure the recovery from the coronavirus pandemic was sustainable.

"The economic recovery from the pandemic is at a very difficult stage. Near term, rising COVID-19 infections will dampen growth and could even deepen our economic hole," he said.

"Uncertainty is elevated, and the recovery is going to be long and choppy."

Key notes

Macklem says economic recovery from the pandemic is at a very difficult stage.

Macklem: In the near-term, rising covid-19 infections will dampen growth and "could even deepen our economic hole".

Macklem: Recent c$ appreciation is hurting competitiveness of Canadian exporters in US market.

Macklem: Canada must boost exports, productivity and business investment to ensure a sustainable recovery.

Macklem: Canadian exports and business investment could bounce back more quickly than they did after the global financial crisis.

Macklem: Since initial shutdowns last spring, trade has bounced back faster than many economists predicted.

Macklem: Recent positive news on vaccines provides some reassurance that more normal activities can resume sometime later in 2021.

Macklem: Disproportionate impact of the pandemic on trade in services has significant implications for Canada.

Macklem: Rapid rebound in goods exports is certainly encouraging.

Macklem: We need to develop new fast-growing markets for our products and new fast-growing products for our markets.

Macklem: Low rates and vaccine roll-out means this is a good time for firms to look at how they judge the rate of return on potential investment.

Macklem: Incoming US administration means Canadian schools and companies may have to fight harder to attract and retain talent.

USD/CAD update

USD/CAD dives to fresh yearly lows under 1.2700 as stimulus hopes trigger risk-on

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Ethereum Price Forecast: BitMine extends ETH buying streak, says long-term outlook remains positive

Ethereum (ETH) treasury firm BitMine Immersion continued its weekly purchase of the top altcoin last week after acquiring 45,759 ETH.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.