The Loonie has lost over 1 percent against the Greenback in the last two days (the USD/CAD has moved from 1.3262 on Tuesday’s close to 1.3445 early today). The big spike started during yesterday’s trading session, when the BoC made its announcement of holding the key interest rate unchanged at 1.75 percent. The BoC’s statement was dovish and inferred that non-inflationary growth is likely, as it highlights downside risks around trade policy, lower oil prices, less momentum of economic activity into the fourth quarter, and the contraction in business investment in the third quarter.
Over the next few days, you should continue paying attention to the development of oil prices, which did not have good news this morning. Saudi Arabia’s oil minister said there had not yet been any agreement made over oil output cuts and oil prices of the West Texas Intermediate Futures fell 2.5 percent to U$ 51.57 a barrel. The oil situation is causing further pressure on the USD/CAD pair, which is trading at 1.3412 at the time of this writing.
On the positive side for the Loonie, the statement of the BoC kept the door open to further hikes and continued to say that the policy rate will need to rise into a "neutral range." The change there is the new emphasis on "range," which the BoC expects to be 2.5-3.5 percent.