As expected, the Bank of Canada left the Overnight Rate unchanged. This decision, that contained concerns about the strength of the Canadian dollar, was widely expected by the markets. USD/CAD is trading slightly higher, under the resistance line.
The rate statement that was released with the rate decision, talks about inflationary pressures from commodity prices, in a still weak global, but recovering global situation. Towards the end of the statement, this paragraph about the Canadian dollar shows concern:
The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.
No intervention is expected by Mark Carney and his colleagues, but these concerns and the direct mention of the currency, weighs on the loonie.
Earlier today, Canada’s trade balance was flat. A surplus of 600 million was expected. Last moth’s surplus was revised to the upside, to 400 million. Prices of new homes rose by 0.4%, slightly stronger than 0.3% that was expected.
USD/CAD bottomed out in recent days, after oil prices lost some ground. Talks about a ceasefire in Libya marked a peak for crude oil, and Canada, which exports the black gold, saw its currency drop.
Last week, when oil prices where on the rise, the Canadian dollar preferred to see positive side of the mediocre employment figures, and it continued gaining.
USD/CAD is currently around 0.96. Levels above are 0.97, 0.98 and 0.9930. Levels below are 0.9510 and 0.94. 0.9520 was the bottom reached last week.
For more levels, technical analysis and more events, see the Canadian dollar forecast.
