CAD weakens after BoC abandons bias for higher rates, downgrades 2019 GDP
The CAD has weakened immediately in response to the BoC announcements, where interest rates have been kept unchanged at 1.75%. However, the central bank has abandoned its bias for higher interest rates as a result of slower global economic growth, which has seen a synchronised turn in central bank sentiment and normalisation.
Adding to CAD weakness is the downgrade in 2019 GDP, which has been marked down from 1.7% to 1.2%, so this effectively rules out any rate hikes and strengthens the case for a rate cut towards the end of the year as some of the futures markets were starting to price in.
USD/CAD has shot up through 1.3500 in reaction to the dovish tilt to the statement, though sellers have come in again at the 1.3515-25. Stronger resistance is seen through 1.3550, so from here we wait to see the price action into the North American session.
We have the press conference just after 16.00gmt, so more updates later.