Breaking: BoC lowers policy rate by 50 basis points to 1.25%, USD/CAD spikes toward 1.3400


The Bank of Canada has decided to lower its policy rate by 50 basis points to 1.25% from 1.75% with an aim to help the economy battle the negative impact of the coronavirus outbreak.

With the initial market reaction, the USD/CAD pair spiked above the 1.3400 area and was last seen trading at 1.3395, adding 0.1% on the day.

Key takeaways from the policy statement

"BoC is ready to adjust monetary policy further if required to support growth and keep inflation on target."

"Coronavirus is a material negative shock to Canadian and global outlooks; monetary and fiscal authorities are responding."

"It is becoming clear that Q1 2020 in Canada will be weaker than the bank expected."

"In light of all developments global and Canadian outlooks are clearly weaker than in January."

"Coronavirus represents a significant health threat to a growing number of countries, hitting business activity in some regions and disrupting supply chains."

"This has pulled down commodity prices and CAD; financial conditions globally are becoming less accommodative."

"It is likely as coronavirus spreads, business and consumer confidence will deteriorate, further depressing activity."

"BoC continues to closely monitor economic and financial conditions in coordination with other G7 central banks and fiscal authorities."

"While markets continue to function well, bank will continue to ensure that the Canadian financial system has sufficient liquidity."

"If the drop in Canada's terms of trade is sustained, it will weigh on income growth."

"Business activity in Canada does not appear to be recovering as had been expected after positive trade developments."

"January inflation was stronger than expected due to temporary factors; core measures remain around 2%, consistent with an economy operating close to potential."

"Q4 consumption was stronger than expected, supported by healthy labor income growth; while residential investment continued to grow."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

AUD/USD: Bears battle 0.6950 as virus woes, US-China tussle intensify

AUD/USD begins the week with a downside gap of nearly 40 pips to 0.6950. Worsening coronavirus conditions in Australia and abroad hurt market sentiment. Sino-American tension escalates with the US warning citizen of arbitrary arrests in China.

AUD/USD News

USD/JPY bears holding their positions below 107 level

Yen remains a safe haven currency of choice as trade wars and the coronavirus play havoc risk apatite. Investors pin hopes on Gilead Sciences reporting that its antiviral drug Remdesivir recorded positive results in clinical trials.

USD/JPY News

Gold: Pierces $1,800 inside short-term bullish flag

Gold prices extend recoveries from $1,798.14, defies two-day losing streak. A seven-day-old bullish technical pattern, sustained trading beyond immediate support favor the buyers. 200-HMA offers additional downside support, bulls will cheer break of $1,811.60.

Gold News

WTI: Depressed above $40 amid output cut talks

WTI defies the late-Friday recovery moves while slipping from $40.80. Saudi Arabia pushes for two million barrels a day output cut, IEA improves on oil demand forecast. Risk-tone remains mildly positive amid virus woes, US-China tension.

Oil News

S&P 500: Bank's earnings in focus, COVID-19 induced insolvency fears simmer away

The S&P 500 will be a key theme on Q2 earnings this week, traders watching the banks for guidance. Wall Street stocks remain in bullish territory, but the S&P 500 is on thin-ice while below the June highs. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures