THE TAKEAWAY: Bank of Canada leaves interest rates unchanged at 1.00% -> Emerging-market volatility and a U.S. economy with less momentum than forecasted are negative factors cited -> USD/CAD Lower
The Bank of Canada left its key benchmark interest rate unchanged as expected at 1.00% on Wednesday. Following the announcement, the Canadian Dollar strengthened against the greenback as the central bank’s policy statement did not produce dovish remarks to hint at any policy moves in the near term.
While the Bank of Canada said that the output gap has begun to narrow, it was mentioned that the U.S. has had slightly less momentum than had been previously forecasted. Another headwind for Canada and the globally economy cited in the release was financial volatility in emerging-markets. Although the brief policy statement cited more negative than positive factors, market participants did not take this to mean further moves in the near term to counter those concerns.
USD/CAD 5-Minute Chart
Written by Gregory Marks, DailyFX Research Team