CAD Gains as BoC Leaves Rates Stable, Downside Pressure Remains

The Canadian dollar gained versus its US counterpart and trimmed the losses against the euro and the Japanese yen today after the Bank of Canada left its target overnight rate stable and continued to speak about future interest rate hikes.
The BoC kept its main interest rate at 1 percent at today’s policy meeting. Such decision was expected by market participants. The central bank noted in the accompanying statement that “over time, some modest withdrawal of monetary policy stimulus will likely be required”. The BoC is the only bank among Group of Seven central banks to retain hawkish stance.
The Canadian currency was a bit soft even after the positive news as the US fiscal cliff weighed on the traders’ confidence. President Barack Obama and Republicans are trying to find common ground, but were unsuccessful so far. That undermines any other positive factors that may influence the Forex market.
USD/CAD fell from 0.9949 to 0.9930 as of 22:39 GMT today. EUR/CAD was up from 1.2987 to 1.3033 before trading at 1.3000. CAD/JPY was at 82.46 after falling from 82.61 to 82.14.

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