No surprises from the BOC: the interest rate remains unchanged at 0.50% once again. The focus shifts to the accompanying statement and the press conference that follows. The lower growth prospects in the accompanying statement weigh on the Canadian dollar.
The statement is dovish and the C$ is sliding. USD/CAD is up to resistance at 1.3070.
The accompanying statement includes a downgrade of growth forecasts for this year and for the next two years. They also state the obvious regarding oil: the fall is dampening business prospects. Full capacity has been pushed back to mid 2017 – far enough in the future and could always be further pushed back once we get closer to the date.
The Bank of Canada was expected to leave its policy unchanged, with the interest rate at 0.50%. Governor Stephen Poloz meets the press at 15:15 GMT.
USD/CAD traded around 1.3030 towards the event, up from the lows.
The rate decision comes less than two days after we learned about a change of guard in Canada. Justin Trudeau will become PM in November, after he ousted incumbent Stephen Harper.
The falling price of oil has hurt the C$ after it had such a nice run in the previous weeks. USD/CAD dropped over 600 pips from the 11 year high of 1.3460 to 1.2825 before bouncing back to current levels.
Here is how the drop of the loonie looks on the Dollar/CAD chart, with clear resistance blocking the pair so far:
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