The Canadian dollar was falling slightly yesterday and today against the other world currencies as the traders expected the interest rate decision of the Bank of Canada monetary policy meeting, which is scheduled for 22nd of April.
The total drop of the Canadian dollar (or so called Loonie) against the U.S. dollar this year is at 1.6% after a 17% gain last year. The drop increased this week as the Bank of Canada is expected to lower the key interest rate from 3.5% to 3.0% on its meeting today. The current interest rate in U.S. is 2.25%.
The market is expecting not only a 50 basis point cut in Canada, but also a statement that will support confidence in further cuts by the BoC.
The last interest rate cut was performed on March 4 it was reduced from 4.0% to 3.5% and the statement signaled that the central bank has now entered a cutting cycle. The present consumer inflation rate in Canada is quite low, thus allowing more loose monetary policy.
USD/CAD rose from 1.0064 to 1.0072 today on Forex, while CAD/JPY pair declined from 102.59 to 102.37.
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