The Canadian dollar approached its weakest point in eight months against its U.S. counterpart after the Bank of Canada indicated it won’t raise interest rates anytime soon with inflation slowing more than expected.
The currency declined as central-bank Governor Mark Carney softened language about tighter policy for the second meeting in a row, saying inflation will “remain low in the near term” in an economy with “material excess capacity.” Carney retained the warning rates will rise over time amid speculation it would be dropped entirely. The central bank kept its benchmark rate at 1 percent.
“After the Bank of Canada seemed to push out interest rate hikes further into the future, and took one more step towards a neutral as opposed to a hawkish stance, that weighed on the Canadian dollar,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS), said by phone from Toronto. “It’s most likely to weaken, just kind of drift lower, as the market digests what’s occurred over the last month.”
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