Invesco Canada blog

Insights, commentary and investing expertise

Currency outlook: CAD rally continues

The Canadian dollar has rallied significantly this year following the Bank of Canada’s (BoC) switch to a hawkish tilt. The combination of reasonably strong growth and the expressed intent of the BoC to remove both emergency rate cuts from 2015 left the market covering shorts in the Canadian dollar. The extreme rally has left the currency susceptible to a short-term retracement, in our view.

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Five trends that could impact global small caps


August 24, 2017
Subject | Active management | Institutional | Invesco

The only constant is change – and the global market is certainly proof of that. As we assess our outlook for the rest of the year, we see several potential changes that could impact international small- and all-cap funds. Here are the five trends we anticipate having the biggest effect – and the ways the Invesco International and Global Growth team is poised to respond.

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Halftime: Mid-year global market outlook


August 11, 2017
Subject | Active management | Institutional | Invesco

In the aftermath of a tumultuous 2016, much discussion has centred around the equity outlook for 2017 and beyond. In fact, the second quarter saw continued strong performance from global markets, though in our view, the long-term earnings outlook remains murky. As we enter the second half of the year, Invesco’s International and Global Growth team assesses global equity performance to date through our EQV (earnings, quality and valuation) lens to identify the key areas to watch – along with potential growth opportunities.

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Interest-rate outlook: Long-term U.S. rates now more dependent on global monetary policy

After hitting lows for the year in June, 10-year government bond yields rose to a two-year high of 1.89% in July,1 as the Bank of Canada (BoC) unsurprisingly increased its benchmark rate from 0.50% to 0.75%.2 The accompanying statement was upbeat as well, brushing off softer inflation numbers as temporary. The BoC’s optimism will probably keep the possibility of another rate hike alive at each of its upcoming meetings. We expect interest rates in Canada to rise from current levels, but we are looking for signs that rates may have topped out in the short term.

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Currency outlook: Strong global growth drives central bank policy convergence

The Canadian dollar has been in a slow decline over the last year. While the Bank of Canada increased the benchmark interest rate, as expected, by 0.25% (to 0.75%) at its July meeting, oil prices appear to have peaked for the year due to increased U.S. oil production, presenting a headwind for the currency.1 We are neutral on the Canadian dollar, and concerns about overleveraged Canadian consumers leave us looking for opportunities to short the currency.

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