The Canadian dollar today weakened against its US counterpart after the Bank of Canada announced that it would maintain interest rates at the current levels. The release of the US new home sales data, which exceeded market expectations also contributed to the USD/CAD currency pair’s rally.
The USD/CAD currency pair rallied by over 150 points from its daily low of 1.2633 hit just before the announcement to trade at highs around 1.2789.
The commodity-linked loonie had been stronger against the greenback in the hours before the BoC announcement due to the stronger global crude oil prices, as tracked by the West Texas Intermediate. However, the loonie could not be saved by the higher oil prices after the BoC announced that it would maintain its target for the overnight rate at 1.00%. The bank stated that it is taking a cautious approach towards the risks associated with higher inflation. BoC Governor, Stephen Poloz, further commented that NAFTA risks were not part of the bank’s projections.
The release of the US new homes sales data by the Census Bureau also boosted the US dollar as the figures beat expectations. The US recorded 667,00o new home sales as opposed to the expected 554,000 in September. The positive house price index and durable goods orders data also contributed to the greenback’s rally against the loonie.
The currency pair’s future performance is likely to be affected by global oil prices and the release of US advance goods trade balance scheduled for tomorrow.
The USD/CAd currency pair was trading at 1.2800 as at 15:58 GMT having rallied from a low of 1.2633 before the announcement. The CAD/JPY currency pair was trading at 88.82 having dropped from a high of 90.10 earlier today.
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