The Canadian dollar was little changed against its U.S. counterpart on Wednesday as Wall Street pulled back from record highs and the Bank of Canada gave less attention to recent gains for the currency than some investors expected.
Canada’s central bank left its key interest rate unchanged at 0.25%, as expected, and said it would maintain its current policy of quantitative easing, in a regular rate decision statement.
“The recent strength in the Canadian dollar didn’t get much attention, other than to say that it was the result of the broad based weakness in the U.S. dollar,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.
“The lack of a stronger callout could be seen as the Bank acknowledging that there’s not a lot it can do to weaken the currency in the current environment,” Mendes said.
Last Friday, the greenback fell to a 2-1/2-year low against a basket of major currencies as optimism that a COVID-19 vaccine will boost the global economy next year reduced demand for safe-haven assets.
Canada on Wednesday approved its first COVID-19 vaccine, clearing the way for doses of the Pfizer Inc shots to be delivered and administered across the country as soon as next week.
The Canadian dollar was trading nearly unchanged at 1.2820 to the greenback, or 78.00 U.S. cents, having traded in a range of 1.2769 to 1.2833. On Tuesday, the loonie touched its strongest intraday level since May 2018 at 1.2763.
The S&P 500 fell nearly 1% as investors weighed U.S. economic stimulus prospects, while U.S. crude oil futures settled 0.2% lower at $45.52 a barrel after data showed an unexpected jump in crude stockpiles.
Canadian government bond yields were mixed across a steeper curve, with the 10-year up 1.4 basis points at 0.755%.
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