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Forex - Canadian dollar off session lows after BoC holds

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Investing.com -

Investing.com - The Canadian dollar pulled back from session lows against the U.S. dollar on Wednesday after the Bank of Canada left rates on hold and dropped its neutral reference about its next policy move in its rate statement.

USD/CAD had touched session lows of 1.1191 ahead of the BoC announcement, before pulling back to trade at 1.1223, almost unchanged for the day.

The BoC left its overnight cash rate unchanged at 1%, in a widely expected decision.

The central bank said that domestic growth remains reliant on "exceptional policy stimulus" and added that "persistent headwinds continue to buffet most economies".

The bank noted that despite weakness elsewhere, the U.S. economy is gaining traction, particularly in sectors that are beneficial to Canada's export prospects. As a result, Canadian exports have begun to improve, but business investment remains weak.

The U.S. dollar has strengthened against other major currencies, including the Canadian dollar, the minutes said.

"Overall, the balance of risks falls within the zone for which the current stance of monetary policy is appropriate and therefore the target for the overnight rate remains at 1%," the bank's rate statement said.

BoC Governor Stephen Poloz was to comment on the decision at a press conference later in the day.

The loonie fell to session lows earlier after official data showed that Canadian retail sales fell 0.3% in August, compared to forecasts for a 0.2% gain.

Core retail sales, which exclude automobile sales, dropped 0.3%, confounding expectations for a 0.3% increase.

Elsewhere, the Canadian dollar was higher against the euro, with EUR/CAD dropping 0.63% to 1.4181.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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