Bank of Canada Keeps Rates on Hold
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(eToro Blog) The Bank of Canada kept interest rates on hold at 1% earlier today. The BOC said that while the situation in Europe is having global ripple effects, the bank sees no reason to cut rates any further. While the decision to leave interest rates on hold were expected by the markets, the comments to not cut rates any further gave a boost to the Canadian Dollar. The Bank of Canada commented that rates are at historic lows and markets will not able to absorb any further economic stimulus without stoking inflation fears. The BOC has kept rates on hold since September 2010. The BOC also said that growth in the second half of the year was slightly stronger.
Australia, another commodity rich nation like Canada, cut rates by 50 basis points yesterday. This is the second consecutive month that Australia has cut rates. The Canadian economy has fared well compared to other developed economies. Canada did not experience a housing bubble like the United States, nor did it experience a sovereign debt crisis like the Europeans. Canadian banks are also one of the highest rated banks in the world. The policy makers chose to ignore the disappointing employment report released last Friday and instead chose to focus on the improving conditions in the U.S. markets. The lack of any chances of rate cut sent the USDCAD lower by 60 pips and the pair is trading around 1.0100 at the time of writing this report.
Wall Street was not able to pick a clear direction today with stock markets trading in a seesaw manner. Markets are looking for a direction from Europe but there was none to be found. The Dow was trading around 12,131, the Nasdaq around 2,643 and the S&P 500 around 1,256 at the time of writing this report. Traders on OpenBook are long on the Dow (DJ30) with average limits around 12,300 and stops around 11,800.
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