Canadian Dollar Rallies After Rate Decision (FXC)
The Canadian Dollar (CAD) rallied against the US Dollar (USD) and other major currencies today, as the Bank of Canada raised the interest rates for another 0.25% to 1%. The rate hike comes after the Canadian central bank became the first among the central banks of G-7 to raise the rates last month and was anticipated by most of the investors. In the statement, the BOC expects strong growth in consumption and investments, but, at the same time, sounded cautious about the future rate hike, signaling that it may leave the rates steady at the next meeting.
The Canadian currency was further boosted after the Ivey Purchasing Managers Index for August came out significantly stronger than expected (65.9 vs. 55.5). The index added to the optimism earlier expressed by the Canadian central bank about the economic recovery.
After the news, the USD/CAD dropped like a rock from 1.0493 all the way to 1.0350s, where it currently trades. The Canadian currency gained against the Euro (EUR) and Japanese Yen (JPY) as well. The EUR/CAD fell from 1.33 to 1.3173, while the CAD/JPY jumped from 79.80s to 81.
The CurrencyShares Canadian Dollar Trust (NYSE: FXC) is up 1.07% today, to $95.89.
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