Canadian Dollar Rallies Higher on BoC Interest Rate Decision

The Canadian dollar today rallied against its US counterpart driving the USD/CAD currency pair to new lows after the Bank of Canada announced its interest rate decision. The loonie’s rally was further boosted by disappointing releases from the US docket such as the weak quarterly GDP data.
The USD/CAD currency pair today crashed from a high of 1.3039 to a low of 1.2839 losing about 200 points after the BoC statement.
The currency pair was on a downtrend from the early European session with a brief rally in the early American session before the Bank of Canada’s interest rate decision. The BoC kept interest rates at the same level, that is at 1.25%, which was in line with expectations, but it was the bank’s monetary policy statement that triggered the loonie’s rally. For the first time, BoC Governor Stephen Poloz expressed optimism regarding workers wages, overall consumption levels, and economic growth in the country. This statement indicated that the BoC was abandoning its cautionary stance, which raised investors’ hopes of a rate hike in July.
Several releases from the US docket such as the quarterly GDP data released by the Bureau of Economic Analysis, and the personal consumption data, both of which missed expectations contributed to the greenback’s overall weakness. The ADP employment change report also missed expectations.
The currency pair’s future performance is likely to be influenced by tomorrow’s Canadian GDP data and US PCE report.
The USD/CAD currency pair was trading at 1.2842 as at 15:48 GMT having crashed from a high of 1.3039. The CAD/JPY currency pair was trading at 84.84 having rallied from a low of 83.17.

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