Fundamentals: To Hike or Not To Hike... Is That a Question?

As strong economic data poured in this month, most recent topped off by an improvement in employment data, the market has almost totally factored in the chance of a rate hike by the bank of Canada. With yields on interest rate futures swelling and the Canadian dollar breaking 30 year highs, there is little chance Governor Dodge won?t hike rates. There are major concerns that in an increase in the overnight lending rate will only lead to an even stronger Canadian dollar, which may damage Canada?s export business. The concern is so grave that some companies, such as UPM-Kymmene Oyj, are contemplating closing down factories in Canada due to already high currency prices.

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