Commodity-price swings will continue to trigger further volatility in the currency, but the Canadian dollar will struggle to extend the near-term recovery beyond the 1.05 level.
The Canadian dollar weakened to lows around 1.0770 against the US dollar ahead of the Bank of Canada interest rate decision on Wednesday which was a 12-month low for the Canadian unit.
There had been some speculation over a cut in rates which pushed the currency weaker, but the bank left rates on hold at 3.0%. The bank also indicated that it was comfortable with the current accommodative stance and suggested that rates would not be cut in the near term. The Finance Ministry was also generally optimistic over the Canadian fundamentals
Following the decision, there was a sharp short-covering rally for the currency which pushed the Canadian dollar stronger to highs beyond the 1.06 level against the US dollar. The Canadian currency retained a firm tone on Thursday with a move towards 1.0550 as the US currency retained a more defensive tone.
The Canadian dollar weakened to lows around 1.0770 against the US dollar ahead of the Bank of Canada interest rate decision on Wednesday which was a 12-month low for the Canadian unit.
There had been some speculation over a cut in rates which pushed the currency weaker, but the bank left rates on hold at 3.0%. The bank also indicated that it was comfortable with the current accommodative stance and suggested that rates would not be cut in the near term. The Finance Ministry was also generally optimistic over the Canadian fundamentals
Following the decision, there was a sharp short-covering rally for the currency which pushed the Canadian dollar stronger to highs beyond the 1.06 level against the US dollar. The Canadian currency retained a firm tone on Thursday with a move towards 1.0550 as the US currency retained a more defensive tone.
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