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As Expected, Bank of Canada Leaves Policy Rate at 0.25%

CAD - Canadian Dollar

The Bank of Canada leaves its policy rate unchanged at 0.25%, after slashing interest rates three times this year amid the COVID-19 global pandemic. Market reaction was somewhat muted as the USDCAD currency pair had already changed coarse overnight, and this morning as demand for US dollars increased. USD demand jump with the sudden need for US dollars as equity markets moved into risk-off mode.
The key takeaways from the Bank of Canada's rate statement and monetary policy report this morning are as follows. The BOC will implement a new provincial and corporate bond purchase program over the coming weeks. The central bank will increase, on temporary bases, the amount to treasury bills it acquires immediately to 40%. The Bank of Canada will continue to purchase five billion Canadian dollars in the government of Canada securities in the secondary market per week. BOC Governor Stephen Poloz will hold a press conference later this morning at 11:15 am EST and offer more insight into the purchase programs it is financing.

Key Movers

It doesn't take long for skepticism to creep into the minds of investors, and that is certainly what happened overnight. Even though the agreement at the weekend among the OPEC+ nations oil prices have dropped 7% to a two week low. The move is now driven by a fear that demand will be so low this year prices will be dampened further. This does not spell good news for the Canadian dollar either, which is hugely reliant on oil prices and oil exports as it has already slipped nearly 1.5% against its US counterpart this morning.

Expected Ranges

USD/CAD: 1.3879 - 1.4121 ▲

EUR/CAD: 1.5242 - 1.5360 ▲

GBP/CAD: 1.7484 - 1.7601 ▲

AUD/CAD: 0.8845 - 0.8939 ▼

NZD/CAD: 0.8388 - 0.8475 ▼