Loonie Falls As Bank of Canada Keeps Rates Steady
The greenback rose on Wednesday, while the loonie slumped after the Bank of Canada kept interest rates steady as expected.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.1% to 97.41 as of 10:44 AM ET (14:44 GMT).
USD/CAD rose 0.6% to 1.3502 after the Bank of Canada kept rates at 1.75%, citing a decline in global growth activity due to trade concerns.
“Ongoing uncertainty related to trade conflicts has undermined business sentiment and activity, contributing to a synchronous slowdown across many countries,” the bank said in a statement.
Still, the central bank said it expects growth in Canada to pick up during the second half of the year.
Elsewhere, the euro was lower, as German business morale fell in April. EUR/USD slipped 0.2% to 1.1197, nearing its lowest level since early March.
“Trade pressure and concerns about global protectionism are weighing over Europe’s overall external position and challenging its growth trajectory. We are looking at underperformance relative to the U.S. for now,” said Karl Schamotta, director of foreign exchange strategy and structured products at Cambridge Global Payments.
Meanwhile, sterling was flat, with GBP/USD at 1.2955 as hopes of a breakthrough on Brexit faded.
The dollar was down against the safe-haven yen, with USD/JPY slipping 0.1% to 111.72.