The Canadian dollar today weakened against its US counterpart after the Bank of Canada left interest rates intact, which drove the USD/CAD currency pair to new highs. The Canadian dollar was also under intense selling pressure due to fears that a trade war with the USA would hurt the country’s economy as the US is a major export market.
The USD/CAD currency pair rallied by over 100 points from a low of 1.2888 to a high of 1.2989 at the time of writing.
The Canadian dollar was initially quite strong against the US dollar after the BoC rate decision, but was later weighed down by concerns about trade uncertainties with the USA. The BoC left interest rates steady at 1.25%, which was in line with expectations. The release of the positive Canadian international merchandise trade data by Statistics Canada had allowed the loonie to strengthen briefly against the greenback. Canada reported a trade deficit of $1.91 billion, which was lower than the expected $2.50 billion deficit.
The impact of the positive US ADP employment change report, which came in at 235,000 versus the expected 200,000, was negated by the weak January international trade balance report released by the Census Bureau. The greenback’s rally was largely supported by fears that President Donald Trump might sign the executive order imposing tariffs on steel and aluminum imports tomorrow.
The currency pair’s future performance is likely to be affected by tomorrow’s Canadian housing starts and US initial jobless claims report.
The USD/CAD currency pair was trading at 1.2987 as at 17:32 GMT having rallied from a low of 1.288. The CAD/JPY currency pair was trading at 81.51 having dropped from a high of 82.11.
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