Canadian Dollar in Strong Relief Rally, BoC Decision Lands
- Written by: Gary Howes
Above: GBP/CAD falls from its highs as CAD recovers.
The Canadian dollar follows the U.S. dollar higher.
The Bank of Canada left interest rates unchanged for a second consecutive meeting to help the country's currency recover from recent losses.
The central bank's decision was expected, but there was a distinct lack of certainty conveyed about the outlook for rates.
Some might read the ambiguity as a potential 'hawkish' signal from the Bank as it further underscores the view that Canada's cutting cycle is complete.
But CAD gains are almost certainly more a function of the dollar's rebound.
The pound to Canadian dollar exchange rate (GBP/CAD) is 0.60% lower on the day at 1.8689, having been as high as 1.8818 on Tuesday.
A recent spike in GBP/CAD reflected the GBP/USD advance to new four-year highs, confirming CAD cross exchange rates are undermined by bouts of USD weakness.
Now with the USD recovering from heavily oversold conditions, CAD tags along higher.
The Bank of Canada decision also underlies a relatively supportive central bank stance that suggests further CAD gains are in store if the USD settles down.
"The current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published today," said BoC Governor Tiff Macklem.
