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The Bank of Canada left the interest rate unchanged at 1%, in line with expectations. The statement is what matters. In recent rate decisions, the BOC retreated from the prior hawkish stance (a talk about future hikes), and it became more dovish than beforehand. This time, the statement is not that dovish, and this supports the loonie.

USD/CAD was trading at around 1.3070 prior to the rate decision, down from the highs of 1.0419 that the pair saw earlier. It is now slightly extending its fall and challenging the 1.0360 level. Update: USD/CAD is now reversing the fall and rising back above 1.0370.

The Bank of Canada says that  the current rate is “appropriate for a period of time”. However, the persistent currency strength is hurting exports.

The BOC also sees annual growth in line with forecasts, even if Q1 could have been better than expected. Inflation likely to remain subdued, while core inflation in line with previous forecast.

Regarding consumers, the central banks sees spending rising moderately, and total household credit growth slowing. The important debt to income ratio is not expected to change much after reaching the current levels.

This is Mark Carney’s last rate decision as the head of the Bank of Canada. Carney will make his next rate decision as the governor of the Bank of England. The next rate decision will be made by Stephen Poloz. Here is more about the incoming BOC governor.

USD/CAD dropped as the dollar underwent a violent correction during the Europe session, falling across the board.

Below 1.0360, support appears at 1.03. Resistance is at 1.0446. For more, see the Canadian dollar forecast. Here is a live chart of USDCAD:

[do action=”tradingviews” pair=”USDCAD” interval=”60″/]