Bank of Canada Pushes Loonie Down

After trading near parity with the U.S. dollar this month, the Canadian dollar was pushed away from equality with the greenback as the national central bank published a report on the subject, as well as stocks and commodities declined today.
Several events extended losses for the Canadian dollar versus most of the 16 main traded currencies, specially the pound and the U.S. dollar, starting with Bank of Canada declaration suggesting that interest rates will remain low in the country as long as inflation doesn’t rebound, as well as another warning showing concerns regarding the current Canadian dollar strength. The loonie’s attractiveness has been deeply affected since the Bank of Canada started to indicate that a strong currency can be an obstacle for the economic rebound in the country, and that interventions will be taken if the currency rally reaches unwelcome levels, fact which has been playing a major role in this week’s decline for the Canadian dollar.
Not only Bank of Canada’s position affected the loonie today, but also a negative day in equities and commodities markets, according to specialists. Differently for other commodity-linked currencies like the Australian dollar, the current loonie rally is being interpreted as a problem for the future of the Canadian economy, as it is likely that its rates will be synthetically influenced by the national central bank in the short-term future.
USD/CAD traded at 1.0461 as of 15:09 GMT from 1.0403 yesterday.

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