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28.10.2021 10:49 AM
Bank of Canada terminates QE program

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The Bank of Canada (BoC) ended its quantitative easing program on Wednesday, but kept its key interest rate unchanged. This provoked Canada spot gold to have a double digit decline, last trading at CA$ 20.

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The bank also announced that it is entering a reinvestment phase, so during this period, it will buy Canadian government bonds solely to replace maturing bonds.

With regards to rate hikes, it said it will consider it by mid-2022, mainly because the members believe that inflation will rise next year, but will return to 2% at the end of the year.

These statements pushed USD / CAD down by 1,000 pips.

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The bank also projected the Canadian economy to grow 5% this year, increase 4.5% next year and rise 3.75% in 2023.

In terms of gold valued in US dollar, prices offset the crash seen in Canada spot gold, thanks to the data on the US manufacturing sector.

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US durable goods orders reportedly fell 0.4% in September, after a revised 1.3% increase in August. This is better than expected because economists predicted a 1.1% decline in the index. Also, excluding transport, new orders rose 0.4%.

But some economists say this data does little to allay growing fears on stagflation. After all, the country is currently seeing a slowdown in economic activity and rising inflation.

Andrey Shevchenko,
Analytical expert of InstaForex
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