Loonie Rallies After Bank of Canada Rate Hike

The  Canadian dollar today rallied to  new highs against most of  its peers including the  US dollar after the  Bank of  Canada announced its interest rate decision in  the  early American session. The  loonie’s rally was further boosted by  the  hawkish tone in the  bank’s monetary policy statement, which investors interpreted as  hinting at  more rate hikes in  future.
The  USD/CAD currency pair today dropped from a  high of  1.3100 in  the  European session to  a  low of  1.2984 after the  BoC announcement.
The  currency pair today traded in  a  range from the  Asian session into the  European session before suddenly dropping to  new lows after the  BoC announcement. The  BoC raised its target rate by  25 basis point to  1.75% from the  previous 1.50%, which was in  line with market expectations. The  rate hike forced the  pair lower as  the  loonie rallied higher and  overpowered the  US dollar, which was quite strong at  the  start of  the  session. The pair then retraced some of  its losses before heading lower.
The  hawkish tone adopted by  the  BoC in  its monetary policy report where it cited the  recent US, Canada and  Mexico trade deal as  being a  major positive for  the  Canadian economy among other factors was interpreted as  being hawkish by  investors, which boosted the  loonie.
The  pair’s future performance is likely to  be influenced by  geopolitical events and  global crude oil prices.
The  USD/CAD currency pair was trading at  1.2984 as  at  16:08 GMT having dropped from a  high of  1.3100. The  CAD/JPY currency pair was trading at  86.72 having rallied from a  low of  85.83.

If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.