Canada’s economy showed clear signs of deceleration in the third quarter, reducing market-implied odds on further rate increases from the Bank of Canada. Although inflation measures remain sticky and above the central bank’s target range, excess demand is clearly ebbing, and labour market tightness is beginning to ease. Conditions will likely worsen in the months ahead as the early autumn surge in global borrowing costs inflicts pain on one of the world’s most deeply over-leveraged private sectors hard, and we expect rate differentials to tilt more firmly against Canada into early 2024, offsetting commodity price gains and a generalized dollar decline in dragging the loonie lower.
Latest Analysis
Latest Analysis
Risk sentiment turning the corner
20 October, 2025
• Market swings. A few bursts of volatility the past few weeks. Sentiment was positive overnight with the S&P500 rising & AUD clawing back lost ground.• US data. US Government Shutdown remains...
No data, no news, no volatility
16 October, 2025
The dollar is cruising toward a third consecutive day of declines and short-term Treasury yields are coming under mild downward pressure as investors firm bets on a fairly-forceful easing path from the...
Dollar retreats on dovish messaging from Powell, trade tensions keep simmering
15 October, 2025
The dollar is retreating and benchmark Treasury yields are plumbing four-week lows after Federal Reserve chair Federal Reserve Chair Jerome Powell refrained from countering market expectations for rate...
Dollar loses momentum on fading geopolitical risks, Canadian dollar leaps on strong jobs
10 October, 2025
A nascent recovery in the dollar is stalling out this morning as geopolitical risks in the Middle East, Japan, and the euro area show signs of easing. The greenback is down -0.2 percent against a basket...
Currency markets enter consolidation mode
09 October, 2025
Currencies outside the US are in consolidation mode. The Japanese yen is holding near the 153 threshold as traders turn more sceptical on the Takaichi administration’s capacity for delivering fiscal and...
Dollar recovery extends
08 October, 2025
The dollar is steamrolling over its major counterparts again this morning as investors unwind exposures in other jurisdictions and pile into bets on continued gains in American equity markets. The trade-weighted...
RBNZ: not done yet
07 October, 2025
The “Go Big or Go Home” mentality was on display once again in NZ today after the RBNZ delivered an outsized 50bp interest rate cut as it attempts to jolt the stuttering economy back to life. The decision...
Markets rally on AI hopes, yen continues its descent
07 October, 2025
Investors are making up for a lack of actual intelligence on the state of the economy by betting on artificial intelligence instead. The dollar is attracting inflows, mid-curve Treasury yields are pushing...
Japanese market jolt
06 October, 2025
• Push-pull forces. US shutdown still in place. Geopolitics outside US generates some vol. EUR & JPY lose ground. AUD & NZD edge up a little.• Japan politics. Shock leadership selection jolted...
Political turmoil plays havoc with currency markets, boosts dollar
06 October, 2025
The dollar is again winning the cleanest-dirty-shirt contest this morning as mounting political turmoil in Japan and the euro area casts a pall over currency markets. The yen is down almost 2 percent and...