Loonie should continue to find it difficult to assert itself against USD and EUR – Commerzbank

The Bank of Canada (BoC) left rates unchanged. The Canadian Dollar fell to its weakest level since October against the US Dollar. The Loonie is expected to continue under downside pressure, economists at Commerzbank report.

No surprise from the BoC as it takes a break

“The BoC left its key rate unchanged at 4.5% as expected. In its statement it confirmed its wait and see approach, but underlined that it was prepared to hike rates further if that was necessary to return the rate of inflation to the 2% target. So no surprise there.”

“The BoC’s approach stands in sharp contrast to the Fed and ECB, as they have signalled further tightening. As a result, the Loonie should continue to find it difficult to assert itself against USD and EUR.”

“The market will probably be positioning itself for the labor market reports from both the US and Canada which are due for publication on Friday. The US data is likely to be of greater effect as far as USD/CAD is concerned. In case of a strong Canadian report combined with equally strong US data the Loonie is likely to experience only limited support against USD.”