Invesco Canada blog

Insights, commentary and investing expertise

Currency outlook: CDN overvalued, USD mixed

The Canadian dollar was reasonably strong until the first week of March, when the U.S. Federal Reserve (the “Fed”) began telegraphing the prospects of a rate hike at its March meeting. The Bank of Canada has appeared to continue to favour a somewhat weaker currency in spite of some strong economic data, including very strong full-time employment reports. Our opinion remains that the Canadian dollar is overvalued and we favour being short the currency.

Continued

Leave a comment

Interest-rate outlook as global growth improves

The 10-year Canadian government bond yield has retreated from its 2017 peak yield of 1.87% and currently sits in the middle of this year’s range of 1.61% – 1.87%.1 Economic data has generally been picking up this year with employment growth showing particular strength. The Bank of Canada has kept policy on hold recently, but remains wary of persistent economic slack. We believe the current trading range is likely to persist unless global economic growth picks up further.

Continued

Leave a comment

Why we are not afraid of the Fed

The Federal Reserve (Fed) raised interest rates in March and is likely to raise them again twice this year, yet the financial markets have taken this news in stride. Why is this? Simply put, the Fed is behaving dovishly, considering the positive growth pattern we are seeing.

Continued

Leave a comment

U.K. triggers Brexit with Article 50: What happens now?

The Brexit process started today, when British Prime Minister Theresa May formally notified the European Union (EU) of the U.K.’s intention to withdraw from the EU under Article 50 of the Lisbon Treaty.

Continued

Third time’s a charm

The U.S. Federal Reserve (Fed) hiked its key interest rate by 0.25% today, to a range of 0.75%–1.00%, marking the third increase in the current cycle. Fixed income markets had essentially priced in the increase two weeks ago, when nearly every Fed speaker acknowledged that a March hike appeared to be warranted. The vote was not unanimous as Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, voted against the action, preferring to keep the target rate unchanged at this meeting.

Continued

Leave a comment