Canadian Dollar Falls On Growth Worries
September 08 2021 - 6:12AM
RTTF2
The Canadian dollar weakened against its major counterparts in
the New York session on Wednesday, as risk sentiment dampened on
concerns that the spread of the Delta variant of coronavirus will
derail economic recovery.
Uncertainty over the tapering of the bond purchase program by
the U.S. Federal Reserve also weighed.
The Bank of Canada left its interest rate and the size of its
quantitative easing program unchanged and pledged to hold the
policy rate at the effective lower bound until inflation target is
met.
The BOC maintained its benchmark rate at 0.25 percent, as
expected.
The quantitative easing program was retained at a target pace of
$2 billion per week.
The central bank noted that the Canadian economy still has
considerable excess capacity and the recovery continues to require
extraordinary monetary policy support.
The BOC remain committed to holding the policy interest rate at
the effective lower bound until economic slack is absorbed so that
the 2 percent inflation target is sustainably achieved. According
to the July projection, this is expected to happen in the second
half of 2022.
The Governing Council indicated that decisions about future
adjustments to the pace of net bond purchases will be guided by its
ongoing assessment of the strength and durability of the
recovery.
The loonie declined to more than 2-week lows of 86.46 against
the yen and 1.2762 against the greenback, off its prior highs of
87.35 and 1.2626, respectively. The next likely support for the
currency is seen around 84.00 against the yen and 1.29 against the
greenback.
The loonie reversed from its early highs of 1.4944 against the
euro and 0.9322 against the aussie, touching nearly a 3-week low of
1.5063 and a 1-1/2-month low of 0.9375, respectively. Next key
support for the currency is found near 1.52 against the euro and
0.95 against the aussie.
Looking ahead, U.S. consumer credit for July will be featured in
the New York session.
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