Bank of Canada decision weighs on the loonie
The Canadian dollar fell across the board after the Bank of Canada delivered a half-point interest rate cut and hinted at more to come.
The situation for central banks has been rapidly evolving along with the spread of coronavirus. The Fed cut by 50 bps in an emergency move yesterday and Governor Stephen Poloz has said they don't like to have rates below the Fed so this isn't a huge surprise. The OIS market was pricing in a 65% chance of a 50 bps cut.
The statement is blunt and says the virus is a material negative shock to the global outlook. Importantly, it also says the Governing Council is ready to adjust further. The OIS market is pricing in a 65% chance of another cut at the next meeting on April 15.
USD/CAD jumped to a high of 1.3417 from 1.3340 moments before the decision. It was a similar story elsewhere as the loonie weakened across the board.
Another spot to watch is CAD/JPY. The loonie is hovering around 80.00 on a 40 pip fall after the announcement. The October low of 79.82 is the spot to watch. Here is the weekly chart:
