The Canadian dollar fell today somewhat following the yesterday’s rise on the surging oil prices, declining supplies in the US and the interest rates decision by the Bank of Canada.
April delivery for crude oil jumped as much as 2.9 percent to $102.50 as the military forces in Libya attempted to retake the regions occupied by the rebels. Crude reached $103.41 on February 24, the highest price since September 2008. The oil inventories of the US shrank by 400,000 last week, while they were expected to increase by 1.1 million.
Despite the talks about the strong currency hurting Canada’s economy the Bank of Canada decided to keep the overnight rate at 1 percent. The BoC interest rate statement wasn’t very hawkish, saying that:
While global inflationary pressures are rising, inflation in Canada has been consistent with the Bank’s expectations. Underlying pressures affecting prices remain subdued, reflecting the considerable slack in the economy.
Many analysts say that the high commodity prices will support the Canadian dollar regardless the action the BoC would take.
USD/CAD traded today at 0.9733 as of 2:58 GMT after it slipped yesterday from 0.9741 to 0.9726. CAD/JPY traded at 84.02, near yesterday’s opening level of 83.99.
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