The Bank of Canada left interest rate unchanged at 4.50 percent and removed their bias to raise interest rates again this year. More specifically, the BoC indicated that even though growth has been stronger than expected in Canada and domestic demand could remain strong, they fear that the sharp US housing downturn and weaker growth outlook could spillover into the Canadian economy.
This along with news that the Canadian Prime Minister has suspended Parliament sent the Canadian dollar tumbling against the US dollar. IVEY PMI is due for release tomorrow. Canadian economic activity is expected to remain strong. Meanwhile, the New Zealand dollar continued to suffer the biggest loss in the currency market. The kiwi is down 1.35 percent against the dollar and 2.16 percent against the Japanese Yen, indicating that risk aversion remains high. The Australian dollar on the other hand saw far a milder loss ahead of their employment report. The labor market should remain tight as the pace of job growth accelerates.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com