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USD / CAD clings to strong gains above 1.3300 after BoC event

  • The USD / CAD pair rose nearly 1% on Wednesday.
  • Bank of Canada left its policy rate unchanged at 0.25% as expected.
  • BoC Governor Macklem says there is scope to do more with QE.

The pair USD / CAD it extended its daily rally during US business hours and touched its highest level in three weeks at 1.3334. At time of writing, the pair was up 1.02% on the day at 1.3315.

Earlier in the day, the widespread strength of the USD and falling crude prices provided a strong boost to the pair. Supported by safe haven flows, the US dollar index rose to its highest level in more than a week at 93.65 on Wednesday. Reflecting risk aversion, the major Wall Street indices opened deep into negative territory and the S&P 500 was last seen losing more than 3% on the day.

Meanwhile, a barrel of West Texas Intermediate (WTI) was down nearly 5% on the day to $ 37 and put additional weight on the shoulders of the commodity-related CAD.

BoC leaves key rate stable at 0.25%

Following its monetary policy meeting, the Bank of Canada (BoC) left its policy rate unchanged at 0.25% as expected. Although the initial market reaction to the BoC policy statement was largely muted, comments from BoC Governor Tiff Macklem on the policy outlook did not allow the CAD to rebound.

Macklem noted that there is scope to do more with the QE program, adding that they will do more if necessary. “The message to Canadians is that interest rates will be low for a long time,” Macklem added.

No high-level macroeconomic data from Canada will be released on Thursday, and investors will be watching for preliminary US third-quarter Gross Domestic Product (GDP) data.

Credits: Forex Street

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