HomeContributorsFundamental AnalysisBank of Canada Surprises With A Rate Hike

Bank of Canada Surprises With A Rate Hike

The Bank of Canada’s monetary policy decision yesterday saw the central bank hiking the key interest rates by 25 basis points. The markets were expecting another rate hike from the BoC but only later in the year. The central bank signaled that the decision to hike interest rates came from the better than expected GDP numbers. The BoC however toned down its forward guidance noting that rate hikes were not on a preset course. Still, the surprise rate hike sent the Canadian dollar to rise 1.2% on the day.

In the US, the ISM’s non-manufacturing index advanced to 55.3 in August up from 53.9 in July, but the US dollar was seen trading subdued.

Looking ahead, investors will be closely watching the press conference by ECB President Mario Dragi and the ECB’s monetary policy statement today. Questions about the ECB tapering its QE program will be on the agenda which has helped fuel the euro rally since July. However, with the euro surging to levels of $1.20, questions on the exchange rate also increases the risks.

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