The Canadian dollar advanced today versus the US dollar and the Japanese yen, rising for the second day, after the Canada’s central bank maintained its overnight rate at the previous level. The currency was down against the euro.
The Bank of Canada kept its target interest rate at 1 percent, a decision expected by analysts. The BoC is just one of many banks that maintained their monetary policy and it may be considered a sign of stabilization in the global economy. Indeed, the central bank mentioned in its statement about “tentative signs of stabilization in European bank funding and sovereign debt markets”. The bank also said that the US economy continues to grow and China’s economy remained strong despite the recent slowdown. Commodity prices were above bank’s expectations and that’s good for the loonie as its performance is tied to commodities.
As for the domestic fundamentals, the BoC wrote:
Recent developments suggest that the outlook for the Canadian economy is marginally improved from the January MPR. Although the economy will likely grow faster than forecast in the first quarter due to temporary factors, underlying economic momentum remains around trend, balancing domestic strength and external weakness.
In the end, the central bank concluded:
With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada.
USD/CAD was down from 0.9967 to 0.9901 and CAD/JPY climbed from 81.24 to 82.41 as of 19:51 GMT today. EUR/CAD rose from 1.3116 to 1.3143 and reached 1.3205 — the highest price since February 29.
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