The Canadian dollar received a significant boost on Wednesday after the Bank of Canada said it would “need to raise [interest rates] to a neutral stance to achieve the inflation target.” As widely expected, the BoC also hiked its benchmark rate by 25 basis points to 1.75 percent.
The Canadian dollar strengthened by nearly a full dollar as USD/CAD tumbled from C$1.3085 to C$1.2993 in the minutes following the BoC’s statement.
Chief among reasons for economic optimism at the BoC is September’s trade deal between Canada, the US and Mexico—the USMCA—which “reduces the trade policy uncertainty in North America that has been an important curb on business confidence and investment.”
Wednesday also brought with it a two-month high in the US dollar’s buying power. The US Dollar Index, which measures the greenback’s value against a basket of currencies, climbed half a percent to 96.50—the index’s highest level since August-17.
The South African rand fell sharply though, after South Africa’s finance minister, Tito Mboweni, announced that government debt will rise for two years more than previously forecast.
Within an hour of Mboweni delivering his medium-term budget—a budget described as “candid and disappointing” by Nedbank analyst Mehul Daya—the rand lost 30 South African cents against the dollar, to R14.45.
Also disappointing on Wednesday was the euro, which fell eight tenths of a cent to a nine-week low of $1.1390 after a measure of growth in German business activity came in at a three-and-a-half-year low. The euro, therefore, emulated its Brexit-troubled pal, the pound, which struggled one day earlier on evidence of UK manufacturing weakness.
The British pound was in high demand on Tuesday ahead of an important meeting between British PM Theresa May and EU officials, at which investors are hoping for a Brexit breakthrough.
19 Feb, 2019 by - Last updated:23 Feb, 2019
Those intending to pick up euros this week should consider heeding warnings offered by MUFG. The bank expects the euro to move towards cheaper levels in the coming days and it would therefore be unwise to pay rates offered on Monday.
18 Feb, 2019 by
The forecast is stormy with the embattled Australian dollar set to lose a further 7 per cent of its value and end the year buying only US66¢, analysts at HSBC have said. A decline into the mid-60s would have the Aussie trading at levels not seen in a decade.
15 Feb, 2019 by - Last updated:20 Feb, 2019
Chinese fintech giant Ant Financial has acquired British payments specialist WorldFirst for an undisclosed amount.
14 Feb, 2019 by - Last updated:21 Feb, 2019
The New Zealand dollar leapt on Wednesday in response to the latest remarks from the RBNZ, which said that interest rates in New Zealand would not be lowered this year or next, wrong-footing investors who had adjusted FX positions to account for lower rates.
13 Feb, 2019 by - Last updated:14 Feb, 2019