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Canadian Dollar Mixed After BoC Surprise Rate Cut

Canadian Dollar Mixed After BoC Surprise Rate Cut

The Canadian dollar showed mixed trading against its major counterparts in the European session on Friday, after the Bank of Canada reduced its benchmark rate unexpectedly to cushion the economic shocks from the COVID-19 pandemic.

The BoC lowered its target for the overnight rate by 50 basis points to 0.25 percent, the bank said in a statement.

The Governing Council is willing to take further action as required to support the Canadian economy and financial system and to keep inflation on target, it added.

The central bank launched two new programs.

The Commercial Paper Purchase Program will help to alleviate strains in short-term funding markets and thereby preserve a key source of funding for businesses.

The Bank will begin acquiring Government of Canada securities worth minimum C$5 billion per week.

The loonie fell to 1.4154 against the greenback, from a 10-day high of 1.3989 set at 1:45 am ET. The next possible support for the loonie is seen around the 1.47 level.

The CAD/JPY pair hit a 2-day low of 76.81. At yesterday’s close, the pair was valued at 78.14. The loonie is seen finding support around the 75.00 level.

Data from the Ministry of Communications and Internal Affairs showed that overall consumer prices in the Tokyo region of Japan were up 0.4 percent on year in March.

That exceeded expectations for an increase of 0.3 percent and was unchanged from the February reading.

The loonie rose to 1.5442 against the euro, reversing from a low of 1.5536 seen in the Asian session. Further rally may take the loonie to a resistance around the 1.50 area.

The loonie bounced off to 0.8504 against the aussie, from a 2-day low of 0.8581 logged in the previous session. The loonie is likely to find resistance around the 0.81 mark.

The material has been provided by InstaForex Company – www.instaforex.com