Canadian dollar slumps
The Bank of Canada toned down the pace of QE if only because it can't sustain the current place indefinitely. They had no QE program before the pandemic and will have purchased half the outstanding government of Canada bonds by year end.
My takeaway from the BOC is the high level of caution, along with a warning that US growth is "slowing considerably".
It's a warning the fits with the overall mood in markets today, which is deeply sour. The loonie has weakened slightly further following the statement but it's in lockstep with a broader more-negative turn, including a 6% decline in oil prices.
What's next? I can't help but feel there's more life left in the break higher today. There's some minor resistance at the October high of 1.3341 and that should cap any intraday move but I don't see it standing in the way of a test of 1.3400/1.3425 before the US election.
On the headline side, we have the BOC press conference coming up and any hint at negative rates would be the only real thing I can see unnerving CAD bulls. Oil is also doing a bit better after the inventory report.
