BOC Schrembri: NAFTA uncertainty is impacting business investment

Ross J Burland FXStreet

Lawrence Schembri, Deputy Governor of the Bank of Canada, has been taking questions in a Q&A and has said NAFTA uncertainty is weighing on business investment while the economy has added capacity and that there is not enough evidence to move neutral interest rate - that is dovish.

However, USD/CAD is now trading below the 100-hr SMA located at 1.2803. At the start of the US session, USD/CAD was trading at 1.2869 - (renewed dollar selling at play at critical levels of a short-term correction in medium-term bear trend; US protectionism/soft dollar policy a thorn in the greenback's side). Also, keep an eye on Trans Mountain pipeline headlines. Boosting the CAD, Finance Minister Bill Morneau said today:

"We are willing to indemnify the Trans Mountain expansion against unnecessary delays that are politically motivated."

Lawrence Schembr Q&Ai:

Lacking evidence to move neutral interest rate
Rates are below neutral due to NAFTA uncertainty
Equilibrium neutral rate in Canada determined by global forces
BoC recognizes that low rates create financial vulnerabilities
capacity is being hindered by firm's reluctance to take on investment in face of uncertainty

About Lawrence Schembri:

Lawrence Schembri was appointed Deputy Governor of the Bank of Canada in 2013, serving as one of two deputy governors responsible for overseeing the Bank’s analysis and activities to promote a stable and efficient financial system. In 2016, he became responsible for overseeing the Bank’s analysis of domestic economic developments.

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.

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