The Canadian dollar dropped today after the nation’s central bank maintained its overnight rate unchanged, in line with market expectations. Losses were limited, though, and the currency returned close to the opening level against some of its counterparts, including the euro and the Japanese yen.
The Bank of Canada left its main interest rate at 1 percent at today’s policy meeting. The central bank commented on the state of the Canadian economy:
The Canadian economy grew at a modest rate in the first quarter, held back by severe weather and supply constraints.
The bank looked into the future with mild optimism:
The ingredients for a pickup in exports remain in place, including the lower Canadian dollar and an anticipated strengthening of foreign demand. Improved corporate profits, especially in exchange rate-sensitive sectors, should also support higher business investment in the coming quarters.
As for other news from Canada, the trade balance demonstrated a deficit, which was bigger than expected. The March’s trade surplus of C$766 million turned into the shortage of C$638 million in April. It was bigger than the median analysts’ estimate of C$200 billion.
USD/CAD traded at 1.0934 as of 19:20 GMT today following the advance from 1.0907 to 1.0954. EUR/CAD was near 1.4872 after rallying from 1.4864 to 1.4916. CAD/JPY bounced to 93.90 following the drop from 93.95 to 93.59.
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