The Canadian dollar rebounded today against its US counterpart and rose versus the euro for the forth straight day as the Canadian central bank raised the interest rates and suggested that it may continue to raise the rates in the future as Canada’s economy still grows, albeit with the slower pace.
The Bank of Canada increased the target rate from 0.75 percent to 1 percent. It said in its policy statement that “financial conditions in Canada have tightened modestly but remain exceptionally stimulative” and “consumption growth is expected to remain solid and business investment to rise strongly”. Still, further rate hikes “need to be carefully considered” as the outlook for Canada’s economic growth worsened as the economic recovery in the US, the biggest Canada’s trading partner, slows.
The analysts expected the bank’s statement to be much more dovish, now they consider the possibility of another rates boost very likely. The Canadian debt rating was kept today at AAA by Fitch Ratings and considered to be stable.
USD/CAD tumbled from 1.0478 to 1.0355 today as of 16:22 GMT after it touched previously 1.0508. EUR/CAD declined to 1.3194 from 1.3286, following the advance to 1.3331.
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