Home USD/CAD Down on Canadian Rate Hike
Forex News Today: Daily Trading News

USD/CAD Down on Canadian Rate Hike

The Bank of Canada raised the interest rate for a third time in a row to 1%. This partial surprise sends USD/CAD down to another attempt on the support line.

USD/CAD fell from 1.0470 to 1.0415 at the time of writing. The Canadian dollar is now approaching a significant line:

Update 14:00 GMT: Canada’s important indicator, Ivey PMI was stellar – 65.9 points, 10 points more than expected. USD/CAD broke below 1.04 and now trades at 1.0370.

The veteran 1.04 line is very close now. A break under this line will send USD/CAD down towards 1.0280, although a similar break yesterday ended only at 1.0340. Below 1.0280, the next lines are 1.02 and 1.01. A rebound will send the pair towards 1.05, and later 1.0680.

There was no clear cut consensus about this particular rate decision. The majority of economists surveyed before the event opted for a rate hike, but this wan’t 100% certain. On the previous rate decision, the BOC expressed concerns about the economy, given the global worries.

The recent monthly GDP release showed that the Canadian economy slowed down in the second quarter of 2010, similar to the slowdown in the US economy. Also the recent employment figures were somewhat disappointing, leading some economists to think that a pause would be seen now.

But on the other hand, consumers are still buying, and the overall situation of the Canadian economy is good. In the accompanying statement, Mark Carney’s BOC hinted that they will pause with rate hikes for now.

It’s important to remember that previous rate hikes were accompanied with worried statements. These statements helped USD/CAD remain above parity. A weaker Canadian dollar is good for the Canadian economy.

Earlier today, Canadian building permits surprised with a drop of 3.5%, better than a drop of 4.2% that was expected.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free..

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.