The Canadian dollar resumed its early gains on Wednesday, after the Bank of Canada maintained its key rate unchanged, as expected.
The central bank retained its target for the overnight rate at 0.5 percent, as the inflation evolved in line with the Bank’s July Monetary Policy Report.
The consumer price inflation remained near the bottom of the target range, reflecting year-over-year price declines for consumer energy products, the statement showed.
Meanwhile, the bank judged it prudent to have stimulative effects of previous monetary policy to work their way through the Canadian economy.
“Movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada’s economy,” it noted.
Data from Statistics Canada showed that Canada’s building permits declined less-than-expected in July.
On a monthly basis, the building permits issued by municipalities edged down 0.6 percent to C$7.7 billion in July, following a revised 15.5 percent increase in June. Economists had been expecting a steeper decline of 5.0 percent.
Canadian housing starts surged up in August to the highest level since September 2012, according to a report by the Canada Mortgage and Housing Corp.
The data showed that housing starts rose at a seasonally adjusted annualized rate of 216,924 in August from an upwardly revised 193,253 units in July. That’s also up from forecasts for an increase of 190,500.
The loonie was trading in a positive territory in the Asian session, buoyed by higher oil prices and a rally in Asian shares, after Chinese government proposed stimulus measures to revive flagging economic growth.
The currency turned mixed during the European session. While the loonie held steady against the euro, it declined against the greenback and the aussie. Against the yen, the loonie advanced.
In New York deals, the loonie advanced to a 5-day high of 1.3162 against the greenback, from its previous low of 1.3261. At Tuesday’s close, the pair was valued at 1.3208. If the loonie extends rise, it is likely to challenge resistance around the 1.30 mark.
The loonie appreciated to 92.07 against the Japanese yen, its strongest since September 1. The loonie is poised to challenge resistance surrounding the 93.5 region. The loonie-yen pair ended Tuesday’s trading at 90.69.
Extending early rally, the loonie firmed to a 5-day high of 1.4662 against the European currency. The pair was worth 1.4795 when it closed Tuesday’s trading. Further uptrend is likely to take the loonie to a resistance around the 1.45 area.
Bouncing back from its early 6-day low of 0.9345 against the aussie, the loonie ticked up to 0.9274. The loonie was quoted at 0.9267 versus the aussie at Tuesday’s close.
The material has been provided by InstaForex Company – www.instaforex.com