USD/CAD goes up even more as the BoC “opens the doors” to a rate cut
USD/CAD goes up even more as the BoC "opens the doors" to a rate cut
The USD / CAD pair increased further and published a new four-week high at 1.3151 after the Bank of Canada’s Poloz press conference. Near the end of the session, the pair trades at 1.3145, keeping most of its earnings. It is the best performance for USD / CAD in a month.
At today’s meeting, the Bank of Canada decided, as expected, to keep the interest rate at one day unchanged at 1.75%. In the statement, the BoC was more moderate than market expectations and caused a drop in the Canadian dollar across the board. It eliminated the reference to the current rate as “appropriate” and reduced the growth projections for the fourth quarter.
During the press conference, BoC Governor Stephen S. Poloz said “obviously the door is open to a cut in interest rates.” The next move will depend on the data. He added that interest rates are still really low.
The loonie fell after the statement and also after the press conference. The fall in crude oil prices also contributed to the fall, although the key factor was the meeting of the Bank of China (HK: 3988 ). “The CAD took a turn for the worse after the moderate pivot of the BOC.
With downward revisions of growth and a recognition that they will monitor whether this slowdown is more persistent than expected to determine the future path of the policy, we are comfortable in our long USD / CAD position that we started earlier this year. In fact, we noticed that the market was not giving enough credit to the deterioration of fourth-quarter data, ”said TD Securities analysts. They have a target for USD / CAD at 1.33.