The Canadian dollar today fell drastically against its US counterpart following the Bank of Canada‘s dovish interest rate decision. The USD/CAD currency pair today rallied to new 2-month highs following the BoC’s cautious statement in the early North American session.
The USD/CAD currency pair today rallied from a low of 1.3351 to a high of 1.3458 in the aftermath of the BoC rate decision.
The currency pair today traded in a tight range throughout the Asian session as before rallying higher in the European session as the greenback remained an investor favorite. The weak crude oil prices as tracked by the West Texas Intermediate, which hit a daily low of 55.42, also contributed to the loonie’s poor performance. The US dollar gained over 50 pips in the short period following the BoC rate decision as markets reacted to the central bank’s dovish stance. The BoC’s monetary policy statement acknowledged that the economic slowdown in Q4 was bigger than expected. Another release revealed that the country’s trade deficit rose to a record high of $4.6 billion.
The US dollar’s rally was not derailed by the ADP employment report, which missed expectations as investors remained worried about geopolitical events such as Brexit. The higher than expected US trade deficit released by Bureau of Economic Analysis also did not derail the pair’s rally.
The pair’s future performance is likely to be affected by global oil prices, investor sentiment, and USD dynamics.
The USD/CAD currency pair was trading at 1.3427 as at 20:37 GMT having rallied from a low of 1.3351. The CAD/JPY currency pair was trading at 83.24 having dropped from a high of 83.77.
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