Canadian Dollar Firms As BoC Hikes Rate, Signals Further Increases
June 01 2022 - 7:24AM
RTTF2
The Canadian dollar moved up against its major rivals in the New
York session on Wednesday, after the Bank of Canada raised its
interest rate by 50 basis points and signaled further hikes to
control high inflation.
The BoC increased its target for the overnight rate to 1.5
percent from 1 percent, as expected.
With the economy in excess demand, and inflation persisting well
above target and expected to move higher in the near term, the
Governing Council continues to judge that interest rates will need
to rise further, according to the accompanying statement.
The bank said that it is continuing its policy of quantitative
tightening.
The BoC added that the pace of further increases in the policy
rate will be guided by its ongoing assessment of the economy and
inflation, and the Governing Council is prepared to act more
forcefully if needed to meet its commitment to achieve the 2
percent inflation target.
The loonie touched 1.2606 against the greenback, its highest
level since April 22. The loonie is likely to test resistance
around the 1.22 level.
The loonie climbed to near a 2-week high of 1.3460 against the
euro from yesterday's close of 1.3570. On the upside, 1.32 is
likely seen as its next resistance level.
The loonie jumped to near a 6-week high of 102.88 against the
yen, compared to yesterday's close of 101.66. The next likely
resistance for the loonie is seen around the 105.00 level.
The loonie rebounded to 0.9062 against the aussie, from a 2-day
low of 0.9122 seen at 9:30 am ET. If the loonie rises further, 0.88
is likely seen as its next resistance level.
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