The Canadian central bank maintained its overnight policy rate at 1.25% today and there were no surprises on the data release as some overnight swap rates had suggested a 90% chance of no change. Although there is a broad-based view that markets are pricing in a 25bps rate hike by October.
The Loonie had lost some ground against the greenback over recent days, which was largely due to an easing in oil prices and a firmer USD. Spot USDCAD had lifted to 1.3040 overnight but dipped down to 1.2952 prior to the news release on firmer WTI and Brent crude oil prices today, before moving above the 1.30 handle prior to the data release.
With NAFTA nowhere closer to a resolution, the Loonie has struggled to find firmer ground recently. However, just after the news release USDCAD plummeted to 1.2880 at the time of writing. This was highly likey due to the BoC dropping its reference to being ‘cautious’ on rates.