Minus 0 * The Canadian dollar has lost ground versus the greenback as a result of the Bank of Canada’s statement * The Loonie is now trading in a band of 1.2431 to 1.2525.
Caroline Valetkevitch is the author of this article.
Reuters, NEW YORK, July 14 – On Wednesday, the Canadian currency rose marginally versus the US dollar as the Bank of Canada decreased the scope of its bond-buying program while maintaining its benchmark interest rates at a record low.
Following the Bank of Canada’s pronouncement, the loonie lost ground against the US dollar. In addition, the bank warned that inflation would be greater than originally expected in the near future.
The bank has reduced its weekly net purchases of Canadian government bonds from C$3 billion to a target of C$2 billion.
“That was probably the market’s assumption, and there was maybe a little bit of pricing in of the potential it could have been bigger,” said Greg Anderson, BMO Capital Markets’ global head of foreign exchange strategy.
As a result, there is “some regret that the (BoC) did not take as much of a hawkish turn as perhaps some in the market perhaps expected.”
The Canadian dollar was recently trading at 1.2506 to the US dollar, or 79.96 cents on the dollar.
At the same time, the dollar index fell 0.4 percent after Federal Reserve Chair Jerome Powell indicated in prepared statements to Congress that the economy was “still a ways off” from the levels the central bank wanted to see before beginning to remove its stimulus assistance.
The dangers of a COVID-19 pandemic to Canada’s economy have “substantially lessened,” according to the central bank, which expects growth to perk up in the third quarter of 2021.
The yield on the Canadian 10-year government bond fell 4.7 basis points to 1.306 percent in the bond market.
(Caroline Valetkevitch contributed reporting, and Steve Orlofsky edited the piece.)/n
