Canadian Dollar Climbs As BoC Ends QE Program
October 27 2021 - 06:34AM
RTTF2
The Canadian dollar firmed against its major counterparts in the
New York session on Wednesday, erasing its early losses, after the
Bank of Canada left its interest rate unchanged and terminated the
quantitative easing program, reflecting the progress in the
economic recovery from the crisis.
The BOC maintained its benchmark rate at 0.25 percent, as
expected.
The bank has ended the QE program and moved into the
reinvestment phase, during which it will purchase Government of
Canada bonds to replace maturing bonds.
The bank now expects Canadian economy to grow by 5 percent this
year before moderating to 4.25 percent in 2022 and 3.75 percent in
2023.
The Governing Council judged that in view of ongoing excess
capacity, the economy continues to require considerable monetary
policy support, according to the accompanying statement.
The BOC confirmed that it would hold the policy interest rate at
the effective lower bound until economic slack is absorbed so that
the 2 percent inflation target is sustainably achieved. The bank
estimates that this could happen in the middle quarters of
2022.
The loonie rose to a 6-day high of 1.2300 against the greenback
and a 1-1/2-year high of 1.4293 against the euro, off its early
near a 2-week low of 1.2432 and more than a 2-week low of 1.4442,
respectively. The loonie may challenge resistance around 1.20
against the greenback and 1.40 against the euro.
The loonie appreciated to a 2-day high of 0.9250 against the
aussie, from a 1-1/2-month low of 0.9337 seen in the Asian session.
On the upside, 0.91 is likely seen as the next resistance level for
the currency.
The loonie bounced off from near a 2-week low of 91.25 against
the yen, rising to 92.47. The next likely resistance for the loonie
is seen around the 94.00 level.
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