Will the weaker loonie affect Bank of Canada’s divergence from the Fed? Keep up with the latest forex updates from abokiFX News

Key Takeaways

  • 💰 The Bank of Canada may be willing to cut interest rates three times before the Federal Reserve makes its first move
  • 🇨🇦 Weaker Canadian dollar has raised concerns about divergence from the U.S. counterpart
  • 📈 Investors expect rate cuts from the BoC in June or July, while Fed is seen on hold until September
  • 💵 BoC benchmark interest rate sits 38 basis points below midpoint set by Fed, further divergence could pressure loonie
  • 📉 Large move in currency needed to impact import costs and inflation target
  • 💲 Weak loonie could increase core goods prices by 2.5% with a 10% fall
  • 📊 Bank of Canada Governor believes limit for interest rate divergence not close yet
  • 📉 Canadian economy projected to grow 1% this year, lagging behind the U.S. economy
  • 🔒 Interest rate gap between U.S. and Canada stayed within 100 basis points since 2008-09 financial crisis, but could change if Canadian outlook worsens
  • 💸 Canadian dollar has weakened, but Bank of Canada is still expected to diverge from U.S. Federal Reserve
  • 🇨🇦 Canadian currency impacted by economic data and makes it vulnerable
  • 📈 Bank of Canada likely to remain on track with plans despite loonie’s performance
  • 🔌 Mexico’s power grid operator Cenace declared an operational state of alert due to insufficient available power.
  • 🌡️ Nationwide grid alert with temperatures reaching at least 35C in the country.
  • ⚠️ States of alert and emergency declared earlier in the month after blackouts during a heat wave.
  • 💡 State electricity company CFE denies a power crisis, citing guaranteed power needs for the next five years.
  • 💰 Trade between Nigeria and Taiwan halved to $500m in 2023 from $1bn in 2021
  • 🌽 Taiwan is a net importer of Nigeria’s agricultural products, particularly sesame seeds
  • 📉 Trade decline in 2022 due to matching demand for Nigerian food products
  • 🌍 Taiwanese government sending delegates worldwide to showcase quality products and combat counterfeiting
  • 🔍 Counterfeited products from China affect profit margins for Taiwanese businesses
  • 🤝 Taiwanese focus on African businesses and guaranteed quality products
  • 🚀 NACCIMA to continue working with Taiwanese companies for mutual business growth

Canada’s Economic Outlook and Currency Divergence

The Bank of Canada is considering multiple interest rate cuts, which could potentially exceed the Federal Reserve’s future moves. This divergence has caused concerns about the weakening Canadian dollar compared to its U.S. counterpart. Despite projections of a 1% growth rate for the Canadian economy this year, there is a possibility of further pressure on the loonie due to the interest rate gap between the two countries. The currency’s vulnerability to economic data highlights the importance of closely monitoring Canada’s economic performance.

Energy Crisis in Mexico

Mexico’s power grid operator, Cenace, has declared an operational state of alert due to insufficient available power, particularly with temperatures rising above 35C nationwide. Recent blackouts during a heat wave led to states of alert and emergency being declared earlier in the month. However, the state electricity company CFE denies a power crisis, ensuring guaranteed power needs for the next five years.

Trade Dynamics Between Nigeria and Taiwan

The trade between Nigeria and Taiwan has seen a significant decline, halving from $1 billion in 2021 to $500 million in 2023. Taiwan’s focus on importing Nigerian agricultural products, specifically sesame seeds, has been affected by the matching demand for Nigerian food products, leading to a decrease in trade volume. Taiwanese efforts to showcase quality products globally and combat counterfeiting, especially from China, aim to strengthen trade relations with African businesses like NACCIMA for mutual business growth.

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