The Canadian Dollar edged higher against its neighbor the U.S. Dollar during the Asian trading session after the Canadian central bank announced that it would leave interest rates unchanged but reaffirmed its outlook for tighter monetary policy in the coming months. As widely expected by analysts, the benchmark lending rate remained fixed at 1% for the time being, a level that has been unchanged for more than two years. The governor of the Bank of Canada had recently been hinting at a rate hike, and remains one of the few industrialized nations to do so.
As reported at 11:50 a.m. (JST) in Tokyo, the USD/CAD pair was trading at C$0.9932, falling from $0.9949 which struck immediately after the rate announcement. One analyst believes that the Canadian Dollar is likely to strengthen now, and could rally to $C0.9750 before too long. The Canadian Dollar’s range has been relatively tight over the past two weeks, struck within a thin band bordered by C$0.9962 on one end and C$0.9906 on the other. Nonetheless, the Loonie outperformed most of its rivals, including the common currency Euro, and briefly struck a session peak of $0.9915 on news from the U.S. which showed that the U.S. Congress was no closer to dealing with the fiscal cliff.