Bank of Canada’s Concern Over CAD Strength Push Loonie Lower

The Canadian dollar reached the weakest in more than four years after the Bank of Canada lowered its inflation forecast and said the currency remains strong enough to be a competitive challenge for the nation’s exports.

The currency extended a four-month slide versus its U.S. peer as the central bank kept its benchmark interest rate at 1 percent, as forecast by every economist in a Bloomberg survey. It’s been unchanged since September 2010. Bank Governor Stephen Poloz said the direction of his next move will depend on the economy’s evolution. He refrained from inserting language into the bank’s statement on a need for lower interest rates.

“Everything they’ve said here so obviously welcomes the currency going down it would be a small step from that to start allowing the currency to drive domestic policy,” said Adam Cole, head of Group of 10 currency strategy at Royal Bank of Canada, by phone from London. “Even though they didn’t move to an easing bias, it takes us a step closer to that, maybe.”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu