Canadian Dollar Extends Rally After BoC Decision
CANBERA (dpa-AFX) - The Canadian dollar continued to be higher against its most major counterparts in New York trading on Wednesday, after the Bank of Canada kept its benchmark rate unchanged, while reducing its economic growth and inflation forecasts for this year and the next.
The bank maintained its key rate steady at 0.50 percent, in line with expectations.
The disinflationary effect of low consumer energy prices and the inflationary effect of exchange rate pass-through are expected to largely dissipate by the end of 2016, the bank said in the accompanying statement.
The Bank slashed the GDP growth estimates to 1.1 percent in 2016 and 2 percent in 2017, from previous projections of 1.3 percent and 2.2 percent, respectively.
The estimates for inflation were lowered to 1.5 percent for 2016 and 2.1 percent for 2017, from previous projections of 1.6 percent and 2.1 percent, respectively.
The currency has been trading in a positive territory in the European session, as oil prices rose after Saudi Arabia's oil minister said certain non-OPEC countries will join OPEC and Russia in curbing supplies.
"Non-OPEC is showing willingness to join this effort. And without mentioning names, many countries have said they are willing to not only freeze, but cut at healthy levels that will match whatever is going to happen by OPEC," Khalid Al-Falih said at the Oil and Money Conference in London.
Crude for November delivery rose $0.74 to $51.36 per barrel.
The loonie firmed to 1.3034 against the greenback, its strongest since September 23. On the upside, 1.29 is possibly seen as the next resistance level for the loonie.
The loonie rebounded to 79.27 against the Japanese yen, from its early 5-day low of 78.72. The loonie may locate resistance around the 81.00 mark.
Data from the Ministry of Economy, Trade and Industry showed that Japan's all industry activity expanded for the third straight month in August.
The all industry activity index grew 0.2 percent on a monthly basis in August, the same rate as registered in July and matched economists' expectations.
The loonie spiked up to 1.4282 against the euro, a level not seen since July 15. The loonie is seen finding resistance around the 1.40 region.
Data from Eurostat showed that Eurozone construction output declined for the first time in five months in August.
Construction output contracted 0.9 percent month-over-month in August, reversing a 1.5 percent gain in the previous month.
The loonie reached as high as 1.0003 against the aussie, off its early low of 1.0068. Continuation of the loonie's uptrend may see it challenging resistance around the 0.99 area.
The latest survey from Westpac Bank showed that the Australian economy picked up the slightest of steam in September, as its leading index advanced 0.06 percent on month.
That's up from the upwardly revised 0.01 percent growth in the previous month.
Looking ahead, at 1:30 pm ET, European Central Bank board member Daniele Nouy is expected to speak at the European Financial Roundtable organised by Deutsche Bank in Frankfurt.
At 2:00 pm ET, Federal Reserve issues the Beige Book of economic condition in Washington.
At 4:15 pm ET, Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will testify before the Senate Standing Committee on Banking, Trade, and Commerce, in Ottawa.
Copyright RTT News/dpa-AFX