Canadian dollar jumps as Bank of Canada lifts benchmark rate 25bps

by Antonio Miles September 7, 2017, 1:50
Canadian dollar jumps as Bank of Canada lifts benchmark rate 25bps

Once branded a bank with an agenda to weaken the currency to support exports, the Bank of Canada's rate increase on Wednesday pushed the loonie up more than a full cent against the greenback. Then, it was the first increase in the key rate since 2010.

The majority of economists surveyed by Bloomberg forecast that the central bank would hold at this meeting.

The come-from-behind economic recovery in Canada may be partly chalked up to fiscal stimulus more easily achieved in Ottawa than in gridlocked Washington, as well as the willingness of banks to lend, said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.

The Bank of Canada forged ahead with another interest rate hike in a nod to the country's surging economy, while signalling its appetite for further tightening may be curbed by a rising Canadian dollar and sluggish inflation.

"Consumer spending remains robust, underpinned by solid employment and income growth".

Speculation that the central bank was going to begin moving the key interest rate up intensified earlier this summer, when Bank of Canada Governor Stephen Poloz said these cuts had "done their job".

Governor Stephen Poloz is trying to strike a balance between bringing interest rates back to more normal levels amid the strongest growth spurt in more than a decade, without harming an economy that is only now beginning to fully recover from an nearly decade-long downturn.

The USMNT defense got exposed against Costa Rica
If you can't win this game at home-and the US has already lost twice at home in this Hex-you don't deserve to go to the World Cup. Starting forward Jozy Altidore picked up a yellow card that will cause him to miss the Honduras game due to accumulation.

"Recent economic data have been stronger than expected, supporting the Bank's view that growth in Canada is becoming more broadly-based and self sustaining", reads a statement from the central bank. "That was possible when housing prices were rising rapidly and interest rates were at record lows".

On Bay Street, the Toronto Stock Exchange's S&P/TSX composite index slipped 5.82 points to 15,084.33, after 90 minutes of trading, but it had been positive before the bank's 10 a.m. ET rate announcement.

Looking ahead, the bank insisted future rate decisions will not be "predetermined" and will be guided by upcoming economic data releases and financial market developments.

Even with the recent economic improvements, the bank still underlined concerns around geopolitical risks and uncertainties related to worldwide trade and fiscal policies.

Investors anxious that the sharp appreciation of the Canadian dollar would hurt prospects for producers of commodities priced in USA dollars.

It noted that inflation remained below its 2.0 percent target, but said there is still some excess capacity in the labor market, and wage and price pressures "are still more subdued than historical relationships would suggest". Furthermore, given elevated household indebtedness, close attention will be paid to the sensitivity of the economy to higher interest rates.


TOP News

Cameroon vs Nigeria: Super Eagles train in Yaounde Stadium ahead Monday game
Mikel Obi (right) and William Troost-Ekong celebrate his goal against Cameroon in Uyo. "He should not change anything". The Indomitable lions in their world cup qualification match against Nigeria , have lost 4-0.

Williams leads American charge at US Open
Spanish 12th seed Pablo Carreno Busta against Argentine Diego Schwartzman will start action on the main arena. The Czech, 27, required surgery on her playing hand and only returned to the sport in May.

Hungary and Slovakia must stick or twist — European Union refugee ruling
The programme is considered a key part of the EU's migration policy . The European Commission , the EU executive, welcomed the ECJ ruling .

United States heavy bombers, jets in show of force against N Korea
Still, it's unclear whether the North will ever act on its threat to fire missiles at the "advanced base of invasion". Some experts believe the next North Korean launches will be bolder unless Washington makes serious concessions.

Saudi Arabia reports 30 per cent increase in Hajj pilgrims from Qatar
Trump chose Saudi Arabia for his first overseas visit as president in May, two weeks before the Gulf crisis erupted. Other countries including Libya, Yemen and the Maldives have followed suit.

FSU QB Deondre Francois Reportedly out for Season with Leg Injury
With Payne taking a starring role, Alabama allowed just 40 rushing yards (on 27 carries) to the Seminoles Saturday night. On the ensuing kickoff, freshman Dylan Moses caused Keith Gavin to fumble, and Keith Holcombe recovered at the FSU 11.

QC soldiers going to Texas
Their transport is a helicopter brought down by the National Guard from the Dallas area, but it has a story of its own. The 44-person medical team will join 36 current Nebraska National Guard crew members now working in relief efforts.

Gareth Southgate praises England players for courage in Malta win
The game went into its final 5 regulation minutes, where the Brit began to score more goals. Kane, however, defended the 46-year-old's tactics.

Missing Temple Student Found Dead; Fmr. Student Charged With Murder
Burleigh was killed in Philadelphia, Ryan said, and the crime did not appear to be premeditated, the police source said. Philadelphia police said Sunday a body found on property belonging to Hupperterz's relative was identified as Burleigh.

Ending the 'Dreamers' Program Could Cost Hundreds of Thousands of Jobs
Trump's immigration policies have sparked protests both inside the United States and overseas since he took office in January. According to Fox News , a senior administration official said that the immigration program could end as early as Friday.