The Canadian dollar is falling against its major counterparts today as the Bank of Canada keeps rates steady. Citing concerns about the Canadian economy, the BOC is keeping rates low, which has the effect of weakening the loonie.
The Bank of Canada announced that it would keep its benchmark rate at 1 per cent, the level it’s been at for three years. Prior to the installment of Stephen Poloz as the new Governor of the BOC, there had been talk of the need to raise rates, but all of that talk disappeared with Poloz’s first couple policy announcements.
Talk of raising rates is conspicuously missing right now and that has many thinking that loose monetary policy will continue in Canada — and weaken the loonie — even as things change in the United States. The divergence between monetary policy between the United States and Canada is probably enough to make the loonie less attractive than the greenback for the time being.
And, if the Fed really does start tapering its asset purchase program, there is a good chance that the Canadian dollar will fall even further behind.
At 18:55 GMT USD/CAD is up to 1.0688 from the open at 1.0650. EUR/CAD is up to 1.4531 from the open at 1.4473. GBP/CAD is up to 1.7515 from the open at 1.7454.
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