Bank of Canada weakens the Canadian dollar

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The Bank of Canada left the interest rates unchanged as widely expected. In its accompanying statement, the bank seemed less hawkish. This is a second blow to the C$ within a week. The previous one was a poor resolution to the political crisis in the US.

USD/CAD is now trading 50 pips higher than before the decision, at 1.0370.

Stephen Poloz and his colleagues acknowledged the consistently low levels of inflation. Without inflation, it is hard to be hawkish.

Regarding growth, the statement mentions stronger growth in 2014 and 2015, with a return to full production capacity at the end of 2015.

Canada encounters high household debt. So, private consumption is not likely to be an engine of growth. And exports are not looking so good after the US only postponed the government shutdown and the debt ceiling crises down the road to the first quarter of 2014.

In addition, the slightly weaker than expected Non-Farm Payrolls report in the US (related to the pre-crisis period), is not helping either.

Higher resistance appears at 1.0446 and at the round number of 1.05. For more levels and analysis, see the USD/CAD forecast.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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