The Canadian dollar surged more than 1% against its most-traded counterparts today after the Bank of Canada chief demonstrated hawkish bias, adding to speculations that the central bank may consider an interest rate hike in the not-so-distant future.
BoC Governor Stephen Poloz said in an interview to CNBC today:
Well rates are of course extraordinarily low and we cut them by 50 basis points in 2015 to counteract the effects of the oil price shock speed up the adjustment. It does look as though those cuts have done their job. But we’re just approaching a new interest rate decision so I don’t want to prejudge. But certainly we need to be at least considering that whole situation now that the capacity excess capacity is being used up steadily.
The comments confirmed that the central bank does not consider additional cuts, and the next move should be a hike.
Crude oil also helped the Canadian currency, jumping more than 1% during the Wednesday’s trading session. Oil prices were falling since the end of May but started a bounce last week, rising for five sessions in six.
USD/CAD dropped from 1.3198 to 1.3025 as of 19:45 GMT today. EUR/CAD declined from 1.4962 to 1.4824. CAD/JPY rallied from 85.08 to 86.14.
If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.