Currency news - Bank of Canada on hold?

Bank of Canada on hold? - 10-12-08

The Canadian dollar weakened ahead of the Bank of Canada interest rate decision on Tuesday and dipped to lows beyond 1.27 following the decision. Trading conditions were choppy as the currency then rallied again.

The central bank cut interest rates by a larger than expected 0.75% to 1.50% at the meeting, and was also much more pessimistic over the global economy with comments over the risk of a steeper downturn.

The bank did not, however, refer to the possibility of further interest rate cuts in the statement which will dampen speculation over further near-term cuts.

The Canadian dollar strengthened to re-test levels beyond 1.25 on Wednesday, but was unable to sustain the gains due to global fears. The levels of risk appetite and trends in metals prices will remain key factors for the Canadian dollar in the short term.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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