Home No acceleration in interest rate moves – CAD falls
Forex News Today: Daily Trading News

No acceleration in interest rate moves – CAD falls

The BOC Statement remained almost unchanged, with a rate hike not expected in the next 8 months. The Canadian dollar reacted with a plunge across the board.

The rate decision made now by the BOC repeated the previous one from September 10th. The central bank kept the Overnight Rate at the rock bottom level of 0.25%, exactly as expected.

The focus wan’t on this decision, but on the prospects for future rate hikes. Also here, there was no news. Here’s a quote from the statement:

Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target.

This is almost a copy-paste from the previous statement. With no acceleration in inflation, there’s no rush to raise the rates sooner. The end of the second quarter is 8 months away, quite far. Canada will definitely not be the next country to raise the rates.

According to the moves in the market, New Zealand might see higher rates next week.

USD/CAD jumped after the rate statement, from 1.0310 to 1.0380 in a matter of minutes. Low interest rates for a long time are hurting the Canadian dollar.

Also in the “race to parity“, Canada won’t be first – the Swiss Franc will probably get there earlier. USD/CHF went as low as 1.0080 earlier and is moving steadily towards parity.

For more on the loonie, see the USD/CAD Forecast.

Yohay Elam

Yohay Elam

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 a 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.