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Forex News: Canadian Dollar Firms As BoC Hikes Rate, Signals

Canadian Dollar Firms As BoC Hikes Rate, Signals Further Increases

06/01/2022 - 11:24:00 (RTTNews)

(RTTNews) - The Canadian dollar moved up against its major rivals in the New York session on Wednesday, after the Bank of Canada raised its interest rate by 50 basis points and signaled further hikes to control high inflation.

The BoC increased its target for the overnight rate to 1.5 percent from 1 percent, as expected.

With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further, according to the accompanying statement.

The bank said that it is continuing its policy of quantitative tightening.

The BoC added that the pace of further increases in the policy rate will be guided by its ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2 percent inflation target.

The loonie touched 1.2606 against the greenback, its highest level since April 22. The loonie is likely to test resistance around the 1.22 level.

The loonie climbed to near a 2-week high of 1.3460 against the euro from yesterday's close of 1.3570. On the upside, 1.32 is likely seen as its next resistance level.

The loonie jumped to near a 6-week high of 102.88 against the yen, compared to yesterday's close of 101.66. The next likely resistance for the loonie is seen around the 105.00 level.

The loonie rebounded to 0.9062 against the aussie, from a 2-day low of 0.9122 seen at 9:30 am ET. If the loonie rises further, 0.88 is likely seen as its next resistance level.

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