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Canadian Dollar Weakens As BoC Leaves Rate Unchanged

The Canadian dollar dropped against its major counterparts in the New York session on Wednesday, as the Bank of Canada kept its benchmark interest rate unchanged as expected.

The BoC maintained its target for the overnight rate at 5 percent for the second consecutive meeting.

“There is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures,” the bank said in a statement.

The bank expects the economy to grow by 1.2 percent this year, 0.9 percent in 2024 and 2.5 percent in 2025.

“Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behavior,” the BoC added.

The loonie touched 1.3810 against the greenback, its lowest level since March 15. On the downside, 1.40 is possibly seen as its next support level.

The loonie fell to 108.56 against the yen, setting nearly a 3-week low. If the currency falls further, 106.00 is likely seen as its next support level.

Against the euro, the loonie edged down to 1.4603. The currency is seen finding support around the 1.48 level.

In contrast, the loonie was trading at 0.8722 against the aussie, up from an early 1-1/2-month low of 0.8788. Next key resistance for the currency may be located around the 0.86 level.

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