The Canadian dollar traded near its lowest level in four months versus the U.S. dollar on Wednesday after the Bank of Canada decided to hold interest rates.
The USDCAD pair hit a peak of 1.3546, the highest level since January 3, while currently trading at 1.3525.
The BoC decided to keep its interest rate unchanged on Wednesday, while continuing to observe developments in the renegotiation between the U.S. and Canada concerning the North American Free Trade Agreement.
The BoC said it has maintained its overnight rate target at 1.75 percent, where the bank rate is correspondingly 2 percent and the deposit rate is 1.50 percent.
The statement of the BOC also mentioned that the oil sector is beginning to recover as production increased and prices remained above recent lows. As well, the housing market indicators have referred to the existence of stable national market, yet the instability has remained is some regions.
While trade restrictions imposed by China had a great and direct impact on Canadian imports, the removal of tariffs of steel and aluminium and increasing prospects for the ratification of CUSMA will have positive implications for Canadian exports and investment.
Overall, recent data have reinforced Governing Council’s view that the slowdown in late 2018 and early 2019 was temporary, although global trade risks have increased.
In this context, the degree of accommodation being provided by the current policy interest rate remains appropriate. In taking future policy decisions, Governing Council will remain data dependent and especially attentive to developments in household spending, oil markets and the global trade environment.
The US dollar index remained firm, hovering higher for a third straight
session at 98.00 after setting a top at 98.08.