Home Daily Commentaries Bank of Canada leaves rates unchanged

Bank of Canada leaves rates unchanged

Daily Currency Update

The Bank of Canada followed expectations and kept interest rates unchanged at 5.0% yesterday. The central bank is leaving the door open for further hikes, however, as inflation remains sticky.

German industrial production has fallen for the third consecutive month in July adding further evidence that the German economy is at risk of recession. It fell by 0.8% month-on-month in July and for the year industrial production is down by 2.1% making it more than 7% below pre-COVID levels. The risk of Germany falling into contraction remains high according to ING economists as retail sales and exports have also fallen for Germany.

For the wider eurozone, the economy is slipping into stagnation however, Barclays economists expect it to avoid a significant recession. They believe that inflation for both the US and Europe is to continue its decline, but no rate cuts will occur before the third quarter of 2024.

Key Movers

The eurozone is due to release its gross domestic product (GDP) reading for the second quarter, consensus suggests that it will remain the same from the previous month at 0.3% quarter-on-quarter and 0.6% year-on-year. The eurozone is also expected to post-employment data at the same time.

Later this afternoon we have initial jobless claims and continuing claims from the US. Initial jobless claims are expected to increase to 234k from 228k prior.

Expected Ranges

  • GBP/USD: 1.2420 - 1.2570 ▲
  • GBP/EUR: 1.1610 - 1.1705 ▲
  • GBP/AUD: 1.9450 - 1.9650 ▼
  • EUR/USD: 1.0700 - 1.0795 ▲