Crude Oil Prices and Passiveness of Central Bank Hurt CAD

The Canadian dollar bounced against its US peer today following yesterday’s losses but extended decline against the euro and turned down versus the Japanese yen. Falling prices for crude oil and speculations that the Bank of Canada will not hike interest rates anytime soon were among the reasons for the currency’s weakness.
Saudi Arabia cut prices of crude oil for US buyers to increase competitiveness of its exports. This led to decline of futures on the commodity, and it is bad for the Canadian economy, which depends on oil export to a great degree.
Central bank’s Governor Stephen Poloz was speaking yesterday in Toronto. He explained that the low interest rates indicate that the economy experiences a “headwind.” As for the future of monetary policy, Poloz said:

We are confident that these headwinds will dissipate in time, but in the meantime interest rates will remain lower than in the past in order to work against those forces.

USD/CAD was down from 1.1356 to 1.1344 as of 4:06 GMT today following the earlier rally to 1.1375. EUR/CAD advanced from 1.4176 to 1.4212, while CAD/JPY declined from 100.38 to 100.08, reaching the low of 99.87 intraday.

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