On Wednesday the Governing Council of the Bank of Canada has decided to maintain the country’s interest rate unchanged at the previous level of 1.75 per cent.
This decision came in as no surprise to most market analysts who already expected the central bank to maintain its current course.
Nonetheless, the post-decision monetary policy statement exhibits the most prevailing fears of the Council, which are mostly associated with growth.
“Growth in Canada is expected to slow in the second half of this year to a rate below its potential. This reflects the uncertainty associated with trade conflicts, continuing adjustment in the energy sector, and the unwinding of temporary factors that boosted growth in the second quarter. Business investment and exports are likely to contract before expanding again in 2020 and 2021.”
Because of this somewhat worried tone of the BOC’s Governing Council, the Canadian dollar momentarily lost steam during Wednesday’s trading session.
The USDCAD appreciated by 0.56 per cent in a day of heavy trading, however, the price of the pair subsequently corrected some of these gains by reverting to the 23.6 per cent Fibonacci retracement level at 1.31355.
USCAD 1D Chart. Image source: Trendsharks ©, created with TradingView.com
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