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Bank of Canada holds interest rates

Wednesday 8 December, 2021

Daily Currency Update

Demand for the Canadian dollar steadied this morning after the Bank of Canada held its benchmark interest rate at 0.25%, as expected. The central bank maintained its view that a hike could come in April 2022. USDCAD was trading around 1.2657 at the time of writing. Policymakers reiterated that the economy still requires considerable support, pointing to the recent floods in British Columbia and the emergence of the Omicron variant as potential risks to recovery. Some analysts had expected a more hawkish tone, which could have been why CAD pulled back from recent highs after the announcement.

Key Movers

EURUSD bounced back above the 1.13 handle as investors’ risk appetite improved slightly. With little macroeconomic figures to digest, COVID-19 developments seem to be the key market driver for now. GBPUSD was little changed on Wednesday as investors lacked substantial economic data to chew on. COVID-19 cases in the UK are drifting higher, however the vaccination campaign seems to be keeping hospitalizations and deaths at a much lower level compared to the start of the year. As mentioned, the protection offered by the current range of vaccines to Omicron will likely be crucial to sterling’s performance over winter, as will likely be the Bank of England’s interest rate decision next week. GBPUSD was sitting around 1.3230 at the time of writing. The US dollar edged lower against a basket of currencies on Wednesday while demand for other commodity-based currencies like the Australian dollar jumped. The US Dollar Index was down 0.35% at around 96.03 at the time of writing.

Expected Ranges

  • EUR/CAD: 1.4227 - 1.4353 ▲
  • GBP/CAD: 1.6654 - 1.6769 ▲
  • AUD/CAD: 0.8997 - 0.9076 ▲
  • USD/CAD: 1.2611 - 1.2668 ▲