The Financial Post reports in its Friday, Feb. 27, edition that Bank of Canada Governor Stephen Poloz has currency traders feeling shell-shocked, and they are starting to think that is the way he likes it.
A Bloomberg dispatch to the Post reports that bets on price swings in the Canadian dollar reached the highest level in three years since Mr. Poloz surprised foreign-exchange markets with an interest rate cut Jan. 21, and then dampened speculation for more easing in a speech on Feb. 24.
Mr. Poloz said late last year that he saw less value in the BOC's telegraphing its intentions than his predecessor, Mark Carney, now that borrowing costs are higher than crisis-era lows. Mr. Poloz said there were benefits to disagreements in the market on future policy, and his actions have led to that.
TD analyst Shaun Osborne says: "I don't know that he's deliberately trying to muddy the outlook or make it difficult for markets to assess where the risks lie. ... We're just not used to this new environment."
The cost for one-month options contracts that protect against price swings between the U.S. and Canadian dollars touched the highest level since 2011 on Feb. 13. They remain above the five-year average.
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