Canadian Central Bank Cuts Implicating Commodities & Currencies - Market Outlook with Peter Esho

The Canadian Central Bank took markets by surprise last week cutting interest rates by another 25 basis points down to 50 basis points. Now this is very important for the commodity currencies, Australia is part of that group. In fact, Australia and Canada are often called commodity cousins. And the big surprise in markets was that the bank of Canada cut rates despite optimism about a turn-around in the US economy comes at a time during the same period of time where Yellen was actually talking the prospects of increasing rates. US unemployment is now down to some of its lowest levels it has been over the past decade and the expectations were that Canada would benefit from the improvement in the United States. The cut and rates is very much commodities driven. What we have seen particularly in Canada is the deceleration and depreciation of energy prices really hitting, corporate profits and overall business sentiment. There is a big sense in Canada at the moment that their big decline particularly in energy prices will start to have an impact on GDP. GDP is just over 1%, an annualised rate that was downgraded but there is an expectation out there as commodity prices remain low that will feed into the growth rate over the next year or so. That has huge implications for Australia. What we saw immediately off the back of that was the Australian dollar selling off. Expectations that the Reserved Bank of Australia which often looks at Canada as a leading indicator. Expectations that Glenn Stevens and the team are now at the RBA will factoring one more rate cut between now and the end of the year. That is at time again when the US dollar is rising. We expect to see more downward pressure on the Australian dollar because of that it would be very difficult for the RBA to move away from way Canada is heading and commodity prices still have not recover from their lows. We have spoken about that in our weekly blog, we have highlighted the opportunities on Invast portfolio select platform where we do have energy and bulk commodity strategies. We have also spoken about something different this week, the future of driverless cars. We have posted that on the Invast blog. The implications and the investment implications around that are all there for you to see. We hope you enjoy it and we will speak to you next week. CONNECT WITH INVAST TODAY Facebook ► https://www.facebook.com/invastglobal Twitter ► http://twitter.com/InvastGlobal Linkedin ► http://www.linkedin.com/company/invast Invast ► http://www.invast.com.au Google+ ► https://plus.google.com/+InvastAu/

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