Interest Rate Outlook Makes Loonie Close Weaker

The Canadian dollar ended Friday with losses as Canada’s central bank was not showing willingness to raise interest rates, while the US Federal Reserve has already cut its stimulus program.

The Fed reduced its monthly asset purchases by $10 billion per month and US policy makers were signaling since then that additional stimulus cuts may follow. Such prospects hurt growth-related currencies.

By contrast, the Bank of Canada dropped its tightening bias. The new Governor Stephen Poloz looks much more cautions than the previous one, Mark Carney. As a result of the policy outlook divergence between the US and Canadian central banks, the loonie (as the Canadian currency is nicknamed) became weaker.

USD/CAD climbed from 1.0645 to close at 1.0705. EUR/CAD was up from 1.4573 to 1.4713, reaching 1.4816 — the highest price since February 2010. CAD/JPY declined from 98.33 to 98.18.

If you have any questions, comments or opinions regarding the Canadian Dollar,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published. Required fields are marked *