Hawkish Stance of BoC Does Not Prevent Weekly Losses of Loonie
The Canadian dollar posted weekly losses amid tension and uncertainty on the Forex market even as Canada’s central bank maintained interest rates and hinted that higher rates may be possible in the future. The Canadian currency was a little higher against the euro as the 17-nation currency had its own share of problems.
The Bank of Canada refrained from lowering borrowing costs and even hinted that it may withdraw some stimulus. That was unusual in the current era of rate cuts. The problem is that bank’s Governor Mark Carney contradicted that hawkish stance, saying that implementation of higher rates may be delayed.
Outside of Canada, Europe (Spain for the most part) was reason for risk aversion, while the United States were a bringer of good news. Negativity prevailed for the most part, resulting in losses for the loonie.
The Canadian currency was stronger than the yen for the most part of the week, but yen’s advance on Friday was so big that erased loonie’s gain completely.
USD/CAD rose from 0.9930 to 0.9978 this week. EUR/CAD was little changed from 1.2929 to 1.2906. CAD/JPY climbed from 79.80 to 80.97, but erased its gains and closed at 79.74.
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Earlier News About the Canadian Dollar:
- Loonie Suffers as Europe Hurts Market Sentiment (2012-10-26)
- Loonie Gains on Expectations of Higher Interest Rates (2012-10-25)
- Bank of Canada Remains Hawkish, Loonie Goes Higher (2012-10-23)
- Loonie Struggles against other Majors (2012-10-22)
- Loonie Declines to Lowest in Several Months on Poor CPI Growth (2012-10-19)