The Canadian dollar was broadly lower against its rival’s during Thursday’s trading even though fundamentals were largely in favor of the currency. The loonie climbed yesterday after the Bank of Canada kept its monetary policy stable.
The BoC kept main interest rate at 0.75 percent at yesterday’s meeting, saying:
The risks around the inflation profile are now more balanced and financial stability risks are evolving as expected in January. At present, we judge that the current degree of monetary policy stimulus is still appropriate and the target for the overnight rate remains at 3/4 per cent.
The announcement was considered largely positive, driving the Canadian dollar higher during the previous trading session. Yet the currency reversed its movement today, erasing yesterday’s gains versus the US dollar and even underperformed compared to the euro that itself was not in a good shape.
It is hard to tell why the loonie is so weak. Certainly, not due to domestic fundamentals as the only economic release from Canada (the Ivey PMI) was relatively positive.
USD/CAD rose from 1.2427 to 1.2502 as of 20:22 GMT today. EUR/CAD went up from 1.3764 to 1.3784 after reaching the low of 1.3693 — the lowest level since September 2013. CAD/JPY declined from 96.30 to 96.06 following the rally to 96.81 — the strongest rate since January 21.
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