The Canadian dollar climbed today after the nation’s central bank maintained its benchmark overnight rate stable and mentioned no plans to reduce borrowing costs that are already quite low.
The Bank of Canada kept its key interest rate at 1 percent today. It was not a surprise for market participants. The central bank said:
As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate. Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected, consistent with achieving the 2 per cent inflation target.
It looks like the BoC is not yet ready to perform an interest rate hike, but at least it is talking about higher rates in the future, not lower. The report on Canadian employment will be released on Friday and it should have a great impact on the loonie, but even more important will be US employment data released on the same day.
USD/CAD went down from 1.0533 to 1.0496 as of 23:54 GMT today. EUR/CAD traded at 1.3855 after falling from 1.3872 to 13796. CAD/JPY rose from 94.48 to 94.98.
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