The Canadian dollar sank today following the release of a surprisingly dovish policy statement from the Bank of Canada. The currency traded at the lowest level since September against most of its major rivals, while against the US dollar the loonie touched the lows not seen since June 2017.
The BoC left its main interest rate at 1.75%. While it was not unexpected, the dovish tone of the bank’s statement surprised markets. Among phrases that caught traders’ attention was the mention that “the global economic expansion is moderating largely as expected,” which opposed the previous month’s statement that the economic outlook is “solid.” As for domestic economic growth, the central bank predicted slowdown:
The Canadian economy as a whole grew in line with the Bankâs projection in the third quarter, although data suggest less momentum going into the fourth quarter.
It was not just doom and gloom, though, as the bank mentioned the past Group of Twenty meeting in a positive light:
Recent encouraging developments at the G20 meetings are a reminder that there are upside as well as downside risks around trade policy.
There are few important economic releases scheduled for the rest of the week. Tomorrow, the trade balance will be released, while employment data is scheduled on Friday. Also tomorrow, the Organization of Petroleum Exporting Countries will meet and will probably discuss oil production cuts that support crude oil prices.
USD/CAD surged from 1.3261 to 1.3379 as of 20:08 GMT today, reaching the high of 1.3399 intraday. EUR/CAD surged from 1.5039 to 1.5176. CAD/JPY dropped from 85.00 to 84.60.
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