The Canadian Dollar pretty much kept pace with the buoyant US Dollar this week, opening at USD/CAD1.2855. With the NAFTA agreement at the forefront of everyone's mind, Ms Rona Ambrose, a member of Canada’s NAFTA Advisory Council, spoke on TV before the week began. She said, “A great deal of progress has been made, specifically around rules of origin for automotives and I think that bodes very, very well for the negotiations… The rules of origin around automotives and making more parts and cars in North America, has always been the sweet spot to get to Donald Trump. It’s a difficult part to get through, and if we can get through this, which it looks like we have, I think it’s a very good sign... If he can say, 'We've reached some kind of an agreement or framework where we can build more cars, build more American parts in North America, in the United States,' that’s a great sign to his voters about more jobs.”
Elsewhere, we saw the Israeli Prime Minister speaking on television citing Iran’s ten years of nuclear deception; this sent oil prices higher to 69 dollars a barrel for WTI however, oil prices retraced 1% as Netanyahu’s comments were not seen as groundbreaking in the region. Canadian gas prices range in Ontario at 1.37 a liter while in Vancouver they are seeing price hit 1.60 a liter.
Locally, Bank of Canada Governor Stephen Poloz delivered a message on Canadian household debt and the takeaway was that the Bank will be monitoring the size of the debt and will take this into a count on future interest rate hikes. The Central Bank is also cognizant of various factors in the economy such as NAFTA, US Trading Policy, and competition which are keeping interest rates low now. Poloz said these factors would fade over time and the need for continued monetary stimulus will diminish, and the policy rate will naturally rise. The Bank of Canada is due to release its interest rates on May 30th the day before 1st quarter GDP the main BOC metric on forecasting future rate hikes.