The Bank of Canada announced the results of its monetary policy deliberations this morning, unexpectedly cutting its benchmark lending rate by 25-basis points to 0.25%, a record low. The BoC acknowledged that “the recession in Canada will be deeper than anticipated, with the economy projected to contract by 3.0% in 2009”. The Bank noted that “the overall risks to its inflation projection are tilted slightly to the downside” and “conditional on the outlook for inflation; the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target”.
USDCAD edged up to its highest level since the beginning of April, briefly jumping past the 1.25-level. The pair has since eased off its highs to hover near the 1.2370-region. Resistance is seen at 1.24, followed by 1.2430 and 1.2470. Subsequent ceilings will emerge at 1.25, backed by 1.2540 and 1.2580.
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