Canadian Dollar Rallies After BoC Rate Hike
July 12 2017 - 05:45AM
RTTF2
The Canadian dollar spiked up against its major rivals in the
New York session on Wednesday, as the Bank of Canada raised its
benchmark rate, citing robust domestic economic growth and the
absorption of excess capacity in the economy.
The BoC raised its benchmark rate by 25 basis points to 0.75
percent from 0.50 percent. The decision was in line with
expectations.
The bank noted that Canada's economy has been robust with growth
broadening across industries and regions. As the adjustment to
lower oil prices wanes, both the goods and services sectors are
expanding.
The BoC also indicated that soft inflation appears to be mostly
temporary and as excess capacity is absorbed, the inflation is
forecast to return close to 2 percent by the middle of 2018.
Crude prices rose after data from the American Petroleum
Institute showed a larger-than-expected draw in U.S crude
inventories last week. The API report showed a fall of 8.133
million barrels in crude oil inventories, higher than estimates for
a drop of 2.99 million barrels for the week ended July 7.
Crude for August delivery rose $1.13 to $46.17 per barrel.
The loonie traded mixed against its major rivals in the European
session. While the loonie rose against the euro and the greenback,
it fell against the aussie and the yen.
Bouncing off from an early 5-day low of 87.42 against the
Japanese yen, the loonie edged up to 88.28. The loonie is likely to
find resistance around the 90.00 mark.
Data from the Ministry of Economy, Trade and Industry showed
that Japan's tertiary industry activity dropped in May after
recovering in April.
The tertiary industry activity dropped 0.1 percent
month-on-month in May, reversing a 1.4 percent rise in April.
However, the pace of decrease was slower than the expected 0.5
percent fall.
The loonie firmed to near a 1-year high of 1.2826 against the
greenback, off its early low of 1.2939. On the upside, 1.265 is
possibly seen as the next resistance level for the loonie.
The loonie climbed to 1.4633 against the euro, its strongest
since April 24. The next possible resistance for the loonie may be
found around the 1.43 level.
Data from Eurostat showed that Eurozone industrial production
growth improved more than expected in May.
Industrial output grew 1.3 percent on a monthly basis, faster
than the revised 0.3 percent increase seen in April.
The loonie reversed from an early 8-day low of 0.9924 against
the aussie, recovering to 0.9829. If the loonie extends rise, 0.97
is possibly seen as its next resistance level.
At 11:55 am ET, the Bank of Canada Governor Stephen Poloz and
Senior Deputy Governor Carolyn Wilkins will hold a press conference
to discuss the monetary policy report in Ottawa, Ontario,
Canada.
The Fed is scheduled to release its Beige Book on economic
condition at 2 pm ET.
Kansas City Fed President Esther George is set to speak in
Denver at 2:15 pm ET.
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