Rates as of 0500 GMT

Market Recap

Currencies were a bit calmer than usual yesterday ahead of todays meeting of the Federal Open Market Committee FOMC, the ratesetting body of the US central bank see below.

Its a bit surprising that CAD tops the list of currencies this morning even though oil prices are down. CAD seems pretty well divorced from oil at this point.

The currency was already gaining when Senior Deputy Governor Carolyn Rogers made some comments that helped it to appreciate further. Following her first speech since joining the Governing Council, Rogers said in answer to a question that housing price growth is unsustainably strong in Canada and We need higher rates to moderate demand, including demand in the housing market.

Its true that the last time Canadian house prices were rising this much, the Bank of Canadas overnight lending rate was over 4, not 1.0.

I think CAD strength might have more to do with USD weakness than CAD strength. USD is 60 of the CAD tradeweighted index and EUR is 22.

Its a little surprising to me that the dollar weakened after the Job Offers and Labor Turnover Survey JOLTS report showed an increase in job openings to a record high see table above while the quits rate returned to its record high of 3.0. There are now a record 1.94 jobs for every unemployed person. This evidence of a hot labor market should help to convince the Fed that they can hike rates much much further without causing the labor market to collapse. Thats why…