US stocks rose at the beginning of the day after FED Governor Janet Yellen confirmed the gradual rate hike and that raising it again this year would be appropriate. She pointed out that the economy is strong enough to accommodate further gradual rise in interest rates, and reducing the Fed's huge portfolio of bonds.
During her testimony, Yellen said that despite the slowdown in the economy, it continued to add jobs, adding that there were some temporary factors that worked to reduce inflation and the Fed focused on achieving the target.
The Canadian dollar strengthened has strengthened today after the BOC raised interest rates for the first time since 2010, rising from 0.50% to 0.75%, and raised its growth forecast for this year and next year. Although inflation remains below target, the Bank expects this to be the result of several temporary factors and to rise towards the target of 2% by mid-2018.
At the press conference, Stephen Poloz, the BOC's governor, confirmed that he was still confident in the current fundamentals of the economy. The BOC's bullish tone pushed the Canadian dollar to its highest level against the US dollar for almost a year as the USDCAD dropped to 1.2678, its lowest since mid- June 2016.
In Britain, the labor market continued to improve, with unemployment at a 42-year low of 4.5%. Although the wage rate continues to slow, there is confidence that continued improvement in labor market conditions will push wages higher. Opinions remain mixed within the Bank of England between a proponent of raising interest rates and those who want to keep them unchanged and that the option of raising rates is still premature.
Oil prices rose sharply after US crude oil inventories fell for the second week in a row by 7.6 million barrels, as well as news that Saudi Arabia, the largest oil exporter will cut its crude oil exports by about 600,000 barrels in August. Oil prices reached 46.44$ a barrel The highest level since July 6, thus achieving the target of the inverted head and shoulders pattern that we mentioned in yesterday's summary.