Canadian Dollar struggles for direction as Bank of Canada keeps interest rates unchanged
- USD/CAD trims losses as traders digest Bank of Canada monetary policy decision.
- The BoC left interest rates unchanged for a fifth straight meeting.
- Policymakers strike a balanced tone on growth and inflation.
The Canadian Dollar (CAD) pares some of its gains against the US Dollar (USD) on Wednesday after a brief bout of strength following the Bank of Canada's (BoC) monetary policy announcement. At the time of writing, USD/CAD trades around 1.3925, recovering from an intraday low of 1.3899.
The BoC kept its benchmark interest rate unchanged at 2.25% for a fifth consecutive meeting, in line with market expectations. In its monetary policy statement, the central bank said economic activity in Canada is weak, uncertainty surrounding US trade policy persists and the war in the Middle East keeps Oil prices elevated.
The statement also noted that there has been limited evidence so far of a broad-based pass-through of higher energy prices to other consumer prices. "Governing Council is continuing to look through the war's near-term impact on headline inflation, but will not let higher energy prices become persistent inflation. As the outlook evolves, we stand ready to respond as needed," the BoC said.
BoC Governor Tiff Macklem said, "Any decision on a possible rate hike is less about a timeline and more about conditions." Macklem also warned that "Higher energy costs triggering broad inflation may require consecutive rate hikes." He added, "If we start to see core inflation drift up, that would certainly get our attention."
The balancing act between inflation concerns and weak economic growth suggests policymakers are not in a rush to tighten monetary policy. As a result, the Canadian Dollar struggles to build on its post-decision gains.
At the same time, a firmer US Dollar, supported by Middle East tensions and hawkish Federal Reserve (Fed) expectations, keeps the near-term outlook for USD/CAD tilted to the upside.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.08% | 0.05% | -0.16% | 0.08% | -0.13% | -0.03% | |
| EUR | 0.12% | 0.01% | 0.15% | -0.08% | 0.14% | -0.01% | 0.08% | |
| GBP | 0.08% | -0.01% | 0.15% | -0.07% | 0.15% | -0.02% | 0.07% | |
| JPY | -0.05% | -0.15% | -0.15% | -0.22% | -0.01% | -0.19% | -0.11% | |
| CAD | 0.16% | 0.08% | 0.07% | 0.22% | 0.21% | 0.04% | 0.12% | |
| AUD | -0.08% | -0.14% | -0.15% | 0.00% | -0.21% | -0.18% | -0.08% | |
| NZD | 0.13% | 0.01% | 0.02% | 0.19% | -0.04% | 0.18% | 0.08% | |
| CHF | 0.03% | -0.08% | -0.07% | 0.11% | -0.12% | 0.08% | -0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
Author
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
