Canadian Dollar Spikes Up As BoC Holds Interest Rate, Oil Prices Advance
April 12 2017 - 5:45AM
RTTF2
The Canadian dollar strengthened against its key counterparts in
the New York session on Wednesday, as the Bank of Canada kept the
benchmark rate on hold amid signs of improvement in Canadian
economy, and oil prices rallied on hopes that OPEC may back output
cuts beyond June.
The central bank decided to leave its key rate unchanged at 0.5
percent, as expected.
In its monetary policy report, the bank forecasts the economy to
continue to grow during the rest of the year, albeit at a more
moderate pace, supported by rising foreign demand, federal fiscal
stimulus and accommodative monetary and financial conditions.
The bank upped its annual growth forecast to 2.6 percent in
2017, from its January forecast of 2.1 percent, reflected by
economic strength at the start of the year.
Oil prices rallied amid hopes that Saudi Arabia would back an
extension to OPEC deal to output cuts beyond June, and on OPEC
report showed tightening oil supplies in March, given compliance
with the OPEC deal.
Crude for May delivery rose $0.08 to $53.48 per barrel.
In its monthly report, OPEC said that its production fell by
153,000 barrels per day in March to average 31.93 million barrels
per day, led by lower production in the United Arab Emirates and
Venezuela.
The loonie has been trading higher against its major rivals in
the European session, amid rising oil prices.
The loonie appreciated to 1.3266 against the greenback, its
strongest since March 21. If the loonie extends rise, 1.30 is
likely seen as its next resistance level.
Data from the Labor Department showed an unexpected decline in
U.S. import prices in the month of March.
The Labor Department said import prices dipped by 0.2 percent in
March after climbing by a revised 0.4 percent in February.
The loonie climbed to a 1-1/2-month high of 1.4072 against the
euro, from a low of 1.4153 hit at 2:00 am ET. Continuation of the
loonie's uptrend may see it challenging resistance around the 1.39
mark.
Data from Destatis showed that German wholesale price inflation
eased for the first time in five months in March.
Wholesale prices rose 4.7 percent year-over-year in March,
slower than the 5.0 percent climb in February, which was the
highest rate of increase since August 2011. The measure has been
rising since October 2016.
The loonie strengthened to 82.67 against the yen, off its early
8-day low of 82.01. The loonie is seen finding resistance around
the 84.00 level.
Data from the Bank of Japan showed that Japan's producer prices
rose up 0.2 percent on month in March.
That was shy of expectations for a gain of 0.3 percent, which
would have been unchanged from February following an upward
revision from 0.2 percent.
The loonie firmed to 0.9926 against the aussie, a level not seen
since February 2. The next possible resistance for the loonie may
be found around the 0.97 region.
At 11:15 am ET, Bank of Canada Governor Stephen Poloz and Bank
of Canada Senior Deputy Governor Carolyn Wilkins will hold a press
conference on Monetary Policy Report in Ottawa.
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