Canadian Dollar Falls After Bank of Canada Leaves Rates Unchanged

Investing.com - The loonie slumped against the U.S. dollar on Wednesday after the Bank of Canada left rates unchanged.

USD/CAD jumped 0.6% to 1.3159 as of 10:51 AM ET (13:51 GMT).

The BoC kept interest rates at 1.75%, citing trade conflicts as the resilience of the Canadian economy “will be increasingly tested.”

The second half of the year is expected to grow at a slower pace due to trade risk and a weakening energy sector, the bank said. It boosted its 2019 growth forecast to 1.5% from 1.3%, but cut its 2020 growth forecast to 1.7% from 1.9%.

Meanwhile, the U.S. dollar was flat as investors waited for the Federal Reserve’s monetary policy decision at 2 PM ET (18:00 GMT). The central bank is expected to cut rates for the third time this year, but the focus will remain on Chairman Jerome Powell’s press conference and if he hints at future cuts.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was unchanged at 97.488. The safe-haven Japanese yen was flat with USD/JPY at 108.88.

Trade tensions remained uncertain after Chile said it is canceling the Asia-Pacific Economic Cooperation summit next month due to ongoing protests. U.S. President Donald Trump and Chinese President Xi Jinping were expected to meet on the sidelines and possibly sign phase one of a trade deal.

The dollar hit a 16-year high against the Chiliean peso. USD/CLP was up about 1.5%.

Elsewhere, sterling was flat after the U.K. Parliament voted to hold an early general election on Dec. 12, as Prime Minister Boris Johnson is betting on a Conservative win to pass his Brexit bill. GBP/USD rose 0.1% to 1.2872 while EUR/USD was up 0.1% to 1.1115.

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