Bank of Canada, USD/CAD, Economy Talking Points
- The Bank of Canada holds interest rate at 0.25%, as expected
- USD/CAD shifts modestly lower following rate decision
- Recent volatility in energy prices inflicted Canadian Dollar weakness last week
As expected, the Bank of Canada held its interest rate at 0.25% Wednesday morning as the central bank continues to accommodate a supportive monetary policy following the COVID pandemic. The move is no surprise given recent comments from policy makers that pledged to keep interest rates low for a significant period of time. Still, USD/CAD moved modestly lower on the news as the Canadian Dollar strengthened.
USD/CAD Price Chart (1-Min Time Frame)
Chart created by Thomas Westwater with TradingView
The Bank of Canada’s policy stance has helped insulate the economic impacts of the COVID pandemic along with support from fiscal actions. Job growth has bounced back and the economy added nearly 250k jobs in August. The lift in the labor market has been strong, but the BOC statement shows concern with it being an uneven rebound.
( 16:09 GMT )
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The BOC also reiterated that the path of the economy remains dependent on the path of the virus. While social distancing measures have been effective, a possible resurgence of cases threatens to hamper economic activity. Household spending was a noted strongpoint in the BOC press release as goods consumption strength surprised. The bank also reaffirmed its commitment to continue large-scale asset purchases to keep rates suppressed across the yield curve.
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