Thursday, September 9, 2010

C$ Hits 3-Week High On Rate Expectations


The Canadian dollar extended gains against its U.S. counterpart on Thursday to its strongest level in three weeks a day after the Bank of Canada raised interest rates for a third straight time and sounded surprisingly hawkish in its outlook.

The central bank nudged its overnight rate target up 25 basis points to 1 percent and, contrary to most economists’ expectations, did not signal a pause at its next scheduled decision in October. It said rates remained “exceptionally stimulative” but kept all options open due to doubts about the U.S. and global recoveries.

“This is follow through on what’s perceived to be the Bank of Canada leaving the door slightly ajar to more hikes,” said Firas Askari, head of foreign exchange trading at BMO Capital Markets. Read more here.