Tuesday saw the Swedish central bankers make the decision to cut the benchmark interest rate to zero. This was the most recent evidence that moving to remove emergency stimulus too quickly can be a risky business. Sweden is not the first country to reverse tack; the European Central Bank heightened rates in 2008 and this was quickly evaporated on two occasions in 2011 to combat deflation. These Swedish actions have left the euro area facing its third recession in six years.
The Canadian dollar strengthened against its US counterpart on Tuesday, largely due to the release of the lower than expected U.S durable goods data.
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