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Forex News: Canadian Dollar Falls As BoC Keeps Rate Unchanged

Canadian Dollar Falls As BoC Keeps Rate Unchanged

10/25/2017 - 10:47:00 (RTTNews)

(RTTNews) - The Canadian dollar weakened against its major rivals in New York deals on Wednesday, after the Bank of Canada left its benchmark rate unchanged following a 25 basis-point hike in September.

The BoC maintained its overnight rate at 1 percent, as expected.

The recent strength in the Canadian dollar is weighing on inflation and exports, the bank noted.

Although less monetary policy stimulus is likely to be required over time, Governing Council would be cautious in making future adjustments to the policy rate, according to the accompanying statement.

"The Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation," it added.

The BoC Governor Stephen Poloz and Deputy Governor Carolyn Wilkins will host a press conference in Ottawa at 11:15 am ET.

Crude oil prices inched lower after an industry report showed a surprise build in U.S. stockpiles.

Crude for December delivery fell $0.31 to $52.16 per barrel.

The American Petroleum Institute reported a small build of 519,000 barrels in United States crude oil inventories. While gasoline supplies plunged, the rise in crude oil inventories couples with OPEC's sluggish compliance with supply quotas suggests the global market is still awash in crude oil.

The currency has been trading in a negative territory in the European session, with the exception of the yen.

The loonie declined to more than a 2-month low of 1.2771 against the greenback, after having advanced to 1.2635 in the immediate aftermath of the announcement. The next possible support for the loonie is seen around the 1.29 region.

Data from the U.S. Department of Commerce showed that orders for long-lasting manufacturing goods surged in September.

The durable goods orders rose by 2.2% in September. Economists had expected the figure to rise by 1.0 percent.

The loonie fell to near a 2-month low of 1.5058 against the euro, off its early high of 1.4895. The loonie is seen finding support around the 1.52 area.

Survey results from Ifo Institute showed that Germany's business confidence improved in October.

The business confidence index rose unexpectedly to 116.7 from revised 115.3 in the previous month. The expected reading was 115.0.

After climbing to near a 2-week peak of 0.9752 against the aussie soon after the decision, the loonie reversed direction and fell to 0.9839. The loonie is poised to challenge support around the 1.00 region.

Data from the Australian Bureau of Statistics showed that Australia's consumer prices rose 0.6 percent on quarter in the third quarter of 2017.

That was shy of expectations for a gain of 0.8 percent but was up from 0.2 percent in the three months prior.

The loonie weakened to an 8-day low of 89.21 against the yen, reversing from a recent high of 90.09. On the downside, 88.00 is likely seen as the next support for the loonie.

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