The Canadian dollar continued its growth after the Bank of Canada raised its rate and the Fed decided to keep rates unchanged. Investors await key US data.
The Canadian dollar continued to strengthen on Thursday after the Bank of Canada raised its key interest rate and the US Federal Reserve left borrowing costs unchanged. Market participants were also preparing for the release of important US economic indicators.
The rate stood at around 1.399 Canadian dollars per US dollar, equivalent to roughly 71.5 US cents per Canadian dollar. The currency gained 0.03–0.04 percent over the day.
The Canadian currency was supported by shifts in interest-rate expectations in both countries. At the same time, uncertainty around inflation, energy prices and US-Canada trade relations may limit further gains.
On Wednesday the Bank of Canada raised its key rate by 25 basis points to 2.50 percent. This was the first hike since July 2023. The regulator noted ongoing pressure from energy prices and raised its inflation forecast, pointing to the possibility of further policy tightening.
The US Federal Reserve kept its key rate range at 3.75–4.00 percent. The American regulator described economic activity as solid but gave no clear signals on the timing of next moves. After the announcement the US dollar weakened, providing additional support to the Canadian currency.
Investors watched for the release of US GDP data and the personal consumption expenditures index, expected at 16:30 Moscow time. These figures could influence expectations for Fed policy. The Canadian dollar, sensitive to commodity prices and developments in the US, may also react to oil-market moves and the progress of trade talks.