Canadian Dollar is back to the levels it reached in July. Overview for 26.10.2017

The USD/CAD pair skyrocketed after the Bank of Canada’s decision to keep the rate unchanged.

The Canadian dollar got under some additional pressure against the USD after the BoC’s October meeting. The current quote for the instrument is 1.2796.

After increasing the key rate in July and September, the Bank of Canada decided to make a pause and kept its monetary policy intact during the October meeting. The rate remained at 1%.

Investors might have felt no concern about this decision, because only 16% of them expected the rate to be changed, if it hadn’t been for the comments that followed. The regulator announced that in the future it would be even more careful in its decisions related to the key rate, because the country’s economy may slow down its growth and improvement. In addition to that, expectations on the GDP for this and next years were revised to the worse. In 2017, the BoC expects the economy to expand by 1.8% in the third quarter after increasing by 4.5% in the second one. In the fourth quarter, the regulator predicts +2.5%. By the end of the year, the indicator is expected to add 3.1%, but only 2.1% in 2018. The inflation expectations were also revised. The indicator is expected to reach the target of 2% only in the second half of 2018.

Taken together, these factors mean that the Canadian regulator will be careful when it comes to tightening its monetary policy in the future, so there won’t be any quick decisions on the benchmark rate.  

For the Canadian Dollar, which was already under significant pressure, these comments turned out to be a very negative driver.

RoboForex Analytical Department