The Canadian dollar today crashed against the US dollar after the Bank of Canada announced its interest rate decision, which was widely interpreted as being dovish. The USD/CAD extended its gains as the price of crude oil fell to new lows taking down the loonie given Canada’s reliance on oil exports as a source of foreign income.
The USD/CAD currency pair today rallied from a low of 1.3075 to a high of 1.3185 shortly after the BoC interest rate decision and was trading near these highs at the time of writing.
The currency pair traded sideways at the start of today’s session before dipping lower in the European session as the loonie appeared to make headway against the greenback. The trend reversed in the early American session after the Bank of Canada released its monetary policy report. The BoC’s Governing Council decided to maintain overnight rates at 1.75% with a dovish twist in the commentary. The BoC Governor Stephen Poloz reiterated that Canada faces external risks that cannot be addressed via monetary policies. He expressed hope that Justin Trudeau‘s minority government would implement measures to cushion the country’s economy.
The decline in global oil prices as tracked by the West Texas Intermediate, which hit a low of 54.41, also contributed to the loonie’s weakness. The release of upbeat preliminary US Q3 GDP data by the Bureau of Economic Analysis also contributed to the pair’s rally.
The currency pair’s short-term performance is likely to be affected by the FOMC rate announcement set for 18:00 GMT.
The USD/CAD currency pair was trading at 1.3178 as at 17:08 GMT having rallied from a low of 1.3075. The CAD/JPY currency pair was trading at 82.62 having fallen from a high of 83.27.
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