Canadian Dollar Gains As BoC Governor Douses Rate Cut Speculation
25 February 2015 - 4:46PM
RTTF2
The Canadian dollar advanced against most major currencies in
the Asian session on Wednesday after Bank of Canada Governor
Stephen Poloz signaled that bank may not cut interest rates yet
again next week.
Speaking at an event in London, Ontario, on Tuesday, Poloz said
that last month's rate cut will buy the bank some time to assess
the economic impacts of the plunge in oil prices.
"The oil-price shock is an important setback in our progress
toward full capacity, full employment and stable inflation because
it is a net negative for economic growth," Poloz said.
He said that the bank has been setting policy with a view to
balance the risks facing both the outlook for returning inflation
sustainably to its target, and the risks to financial stability
such as those posed by the indebtedness of Canadian households.
Last month's rate cut was intended to take out some insurance
against both sets of risks, he said.
At the semi-annual monetary policy testimony before the Senate
Banking Committee on Tuesday, U.S. Federal Reserve chair Janet
Yellen indicated that the Fed is not likely to begin raising
interest rates in at least the next couple of monetary policy
meetings.
Meanwhile, the Asian stock markets are advancing amid the
increase in risk appetite. Crude oil prices are also higher. Crude
oil for April delivery is currently up $0.01 to $49.29 a
barrel.
Greece's package of proposed economic reforms to euro group was
approved by its euro zone creditors on Tuesday, securing an
extension of its financial lifeline of bailout for another four
months.
Tuesday, the Canadian dollar rose 0.25 percent against the yen,
0.66 percent against the U.S. dollar and 0.61 percent against the
euro.
In the Asian trading today, the Canadian dollar rose to 5-day
highs of 1.2458 against the U.S. dollar and 1.4132 against the
euro, from yesterday's closing quotes of 1.2484 and 1.4158,
respectively. If the loonie extends its uptrend, it is likely to
find resistance around 1.20 against the greenback and 1.37 against
the euro.
Against the yen, the loonie advanced to a 5-day high of 95.29.
On the upside, 97.20 is seen as the next resistance level for the
loonie. Looking ahead, Swiss UBS consumption indicator for January
is due to be released at 2:00 am ET.
U.K. BBA mortgage approvals for January is also set to be
published later on in the session.
At 5:00 am ET, Bank of England Governor Mark Carney is scheduled
to launch a new research agenda for the central bank in London.
In the New York session, U.S. new home sales for January is
due.
At 10:00 am ET, Yellen is due to testify before the House
Financial Services Committee in Washington D.C.
Subsequently, European Central Bank President Mario Draghi will
take part in a plenary debate on the ECB's Annual Report 2013 at
the European Parliament in Brussels at 11:30 am ET.
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