Currencies mirror their central bankers
Here's a prediction for 2018: The Canadian dollar will be volatile.
In the past week, Poloz quietly laid out a mission statement. He thinks that central banks need to back away from forward guidance -- from forewarning markets about what's coming.
Instead, he's going to outline the risks and leave it to markets to figure out what's about to happen. No more hand-holding.
The result: Every CAD trader has no idea what's coming and every data point is a chance to re-evaluate.
USD/CAD fell on strong retail sales yesterday but it's rebounded on weak GDP today.
In the bigger picture, the 1.2624 to 1.2920 range is setting up for a big breakout one way or the other. I expect going with the break will be the first great FX trade of 2018.
