Canadian dollar soars vs. U.S. counterpart

Canadian dollar soars vs. U.S. counterpart after BOC decision


The Canadian dollar moved off a 13-year low Wednesday after the Bank of Canada surprised investors by announcing it would maintain its overnight rate at half a percentage point, when many investors expected a 25 basis point cut.

Currency traders apparently took solace in the bank’s words. After the announcement and statement were released, the U.S. dollar USDCAD, -0.0138% slid to C$1.45, far below its session high of C$1.4691, which also represented a 13-year high against the loonie.

Most market strategists expected one of two outcomes from the BOC’s January policy meeting: Either the central bank would cut its overnight rate to a quarter of a percentage point — or hint that a cut would follow in the near future.


As it happens, it did neither.

Instead, the central bank emphasized its economy’s resilience despite falling oil prices, suggesting that inflation and growth are coming along just fine — despite a speed bump in the fourth quarter of 2014.

The move came as a shock to market strategists who had criticized the BOC’s view from its last quarterly policy report as unrealistically sanguine. But it appears BOC Governor Stephen Poloz & Co. are doubling down.

No surprise there. With the 500 dollar dow drop, 27 dollar a barrel oil, and the crash and uncertain status of China with regard to the economic role of mass-provider for electronics and cheaply distributed goods, the Canadian dollar would soar against all of that quickly. I'm sure there's more to it than that, but so much is crashing and closing between America, China, and Russia that Canada and other places would have to rise by default in stark contrast to them with their own economies not all that great, but now suddenly not as bad as what they compared to before all of it happened.