Loonie climbs against greenback after central banks leaves interest rates at 1 percent

Posted On: June 05, 2012
The central bank of Canada keeping its interest rate at 1 percent on Tuesday prompted the nation's monetary unit to mildly advance against its southerly counterpart, according to Reuters.

Though the Bank of Canada kept interest rates intact, the body led by Governor Mark Carney indicated that it might later hike rates. The central bank noted the pace of global economic development had slowed during the past several weeks as the sovereign debt crisis continued thrashing about, but it did not rule out an interest rate hike anon.

"The market consensus was getting ahead of itself with respect to the next move being a cut, and (the governor) successfully scaled back those expectations," managing director of foreign exchange Jack Spitz with National Bank Financial told Reuters. "As a result we've seen a move higher for the Canadian dollar."

But gains for the loonie were tempered by deep concerns for Spain's fiscal state due to the nation's troubled banks.

Bloomberg reports the monetary unit benefited from Carney's announcement as it climbed from six-plus month lows touched Monday against the U.S. dollar.

Category: Industry News

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