22 Jan 2014
USD/CAD jumps on improved outlook from BoC
FXstreet.com (London) - USD/CAD has initially jumped following the Bank of Canada’s decision to hold interest rates as expected. The biggest driver of the gains comes from the bullish statement accompanying release.
The Bank of Canada is maintaining its target for the overnight rate at 1 percent. The Bank Rate is correspondingly 1.25 percent and the deposit rate is 0.75 percent.
Upgraded outlook from BoC
The accompanying statement from the BoC forecasts improved economic conditions, lifted by an improved US economy. The statement forecasts real GDP growth picking up from 1.8 percent in 2013 to 2.5 percent in both 2014 and 2015. This implies that the economy will return gradually to capacity over the next two years.
Jawboning the CAD
The statement also included some talking down of the CAD in the hope of importing some inflation through a weakened currency relative to the USD. The statement attributes its imporved outlook to: “Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business confidence and investment.”
USD/CAD is currently trading at CAD1.1037, up 0.62 percent on the session, down slightly from a high of CAD1.1044 immediately following the BoC release.
The Bank of Canada is maintaining its target for the overnight rate at 1 percent. The Bank Rate is correspondingly 1.25 percent and the deposit rate is 0.75 percent.
Upgraded outlook from BoC
The accompanying statement from the BoC forecasts improved economic conditions, lifted by an improved US economy. The statement forecasts real GDP growth picking up from 1.8 percent in 2013 to 2.5 percent in both 2014 and 2015. This implies that the economy will return gradually to capacity over the next two years.
Jawboning the CAD
The statement also included some talking down of the CAD in the hope of importing some inflation through a weakened currency relative to the USD. The statement attributes its imporved outlook to: “Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business confidence and investment.”
USD/CAD is currently trading at CAD1.1037, up 0.62 percent on the session, down slightly from a high of CAD1.1044 immediately following the BoC release.