October 21, 2008 - Forex Economic News
Bank of Canada lowers interest rate by 25 basis points. Canadian Dollar falls in Forex Trading.
The Bank of Canada announced today that it had lowered its interest rate by 25 basis points from 2.50 percent to 2.25 percent. Today's rate cut comes after the BOC had previously lowered the interest rate by 50 basis points on October 8th in coordination with other major central banks. The surprise October 8th rate was in concert with the U.S.A., China, England, Switzerland, 
Sweden and the European Union in effort to ease turmoil from the credit crisis and a surge in declining global stock exchanges. Today's rate reduction was below market forecasts that were predicting the BOC would slash its rate by 50 basis points.
The BOC noted in their statement that with a likely global recession following a current U.S. recession, the BOC expects Canada's economic "growth to be sluggish through the first quarter of next year, then to pick up over the rest of 2009 and to accelerate to above-potential growth in 2010." The Bank is projecting GDP growth rates of 0.6 percent in 2008 and 2009 with inflation continuing to ease through 2010. The next BOC rate decision is scheduled for December 9th.
Canadian Dollar loses ground in Forex Trading.
The Canadian loonie dollar has been losing ground today in the forex market since the rate reduction announcement. The U.S. dollar has advanced against the Canadian loonie to trade at its highest exchange rate since August of 2005 as the USD/CAD pair has eclipsed the 1.2150 threshold today. The USD/CAD opened the day at 1.1930 and trades at the exchange rate of 1.2169 in the afternoon of the U.S. session at 1:40pm ET. The euro has also gained against the loonie as the EUR/CAD trades at the 1.5935 level after opening the day at 1.5902. The loonie has also declined verses the Japanese yen as the CAD/JPY has fallen to the 82.15 yen per loonie level after opening at 85.29.
USD/CAD Chart - The USD/CAD trades at its highest level since August 2005(Weekly Chart).
tags: Canada interest rate, loonie, CAD, forex trading
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