No new news in the Bank of Canada’s decision to maintain its overnight rate target at 0.25% and to start increasing this rate at the end of next quarter. The Bank of Canada continues to lament the stubborn strength of its currency despite these rock-bottom rates:
“…the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada.
…The risks to the outlook for inflation continue to be those outlined in the January MPR…On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar.”
The Canadian dollar has remained resilient throughout the rally of the U.S. dollar since December. USD/CAD is now near its lows from last year. The currency did not react much to this morning’s rate decision, but it rallied strongly into the decision. This rally included yesterday’s announcement that fourth quarter GDP came in at 5.0%, above the 4.2% consensus expectation.
Source: dailyfx.com charts
Be careful out there!
Full disclosure: no positions