Canadian Dollar Higher After BoC Holds Rate Steady
June 03 2020 - 7:07AM
RTTF2
The Canadian dollar advanced against its most major counterparts
in the New York session on Wednesday, after the Bank of Canada left
its interest rate unchanged, saying that the impact of the COVID-19
pandemic seemed to have peaked.
The BOC maintained its benchmark rate at 0.25 percent, as
expected.
The Canadian economy appeared to have avoided the most severe
scenario presented in the bank's April Monetary Policy Report, the
bank said in the accompanying statement.
"Decisive and targeted fiscal actions, combined with lower
interest rates, are buffering the impact of the shutdown on
disposable income and helping to lay the foundation for economic
recovery," it said.
Although the outlook for the second half and beyond remained
heavily clouded, the bank expects the economy to resume growth in
the third quarter, it added.
Extending early rally, the loonie jumped to a 3-month high of
80.63 versus yen. The loonie is poised to challenge resistance
around the 81.5 mark.
The loonie rose back to 1.3485 versus the greenback, not far
from a 1-year peak of 1.3480 seen in the Asian session. The loonie
is likely to face resistance around the 1.33 region, if it gains
again.
The loonie bounced off to 1.5132 versus the euro, from a 2-day
low of 1.5200 hit at 9:45 am ET. Next key resistance for the loonie
is likely seen around the 1.49 level.
Survey results from IHS Markit showed that the euro area private
sector contracted sharply in May, but improved from April as
lockdown restrictions implemented to prevent the spread of
coronavirus loosened in many economies.
The final composite output index rose to 31.9 in May from
April's record low of 13.6. The score was above the flash reading
of 30.5.
In contrast, the loonie held steady against the aussie, after
having recovered from a 1-year low of 0.9415 set in the Asian
session. At Tuesday's close, the pair was valued at 0.9323.
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