USD/CAD Drops to Two-Year Low After Fed Statement

The Canadian dollar gained to the highest level in two years versus its US counterpart today after the Federal Reserve released a relatively dovish policy statement. The loonie also rallied against the weak Swiss franc but dropped versus the euro and Japanese yen.

The Federal Reserve concluded its two-day meeting on Wednesday, releasing a statement that was considered dovish by markets. That led to a drop of the US dollar against other currencies, including the Canadian dollar.

The loonie (as the Canadian currency is nicknamed) also got a boost from crude oil prices that surged more than 1%. The reason for the rally was the unexpectedly big draw from US oil inventories.

Some market analysts believe, though, that the Canadian currency does not have much more room to go higher. While economists anticipated the Bank of Canada to start monetary tightening, that has been already priced in. Therefore, the monetary policy outlook has limited capacity to drive the loonie further up.

USD/CAD dropped from 1.2507 to 1.2447 as of 23:04 GMT today. EUR/CAD edged up from 1.4566 to 1.4605. CAD/JPY slipped from 89.42 to 89.27. CAD/CHF advanced from 0.7611 to 0.7637, and its session high of 0.7669 was the highest since February 27.

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