TORONTO — The Canadian dollar got a boost Wednesday following the Bank of Canada’s decision to raise growth expectations for the year while holding its key interest rate.
The loonie climbed 0.33 of a cent to 75.34 cents US.
The central bank announced it was keeping the rate at 0.5 per cent against the backdrop of potential risks associated with the upcoming economic policies from the U.S.
Although the move was widely anticipated, bank governor Stephen Poloz said that he was taking an interest rate cut off the table. The central bank had flirted with the idea in January when there was high uncertainty and concern surrounding the U.S. trade agenda and Canada’s economy.
“All the big players from Canada have been down to Washington and they’ve been getting along,” said Colin Cieszynski, chief market analyst at CMC Markets Canada.
“Most importantly, Prime Minister Trudeau and President Trump are getting along and the U.S. has gone out of its way to say that we’re not going after Canada. The bank’s stance has gone from neutral to dovish to a firm and solid neutral.”
Still, Cieszynski said markets don’t believe the bank will hike rates until 2018, even if the Canadian economy continues to improve and the U.S. follows its anticipated schedule of rate increases.
Meanwhile, the rise in the Canadian dollar came despite some softness in oil prices, which fell after finishing higher for six consecutive days. The May crude contract lost 29 cents at US$53.11 per barrel.
On the markets, Toronto’s S&P/TSX composite index was down 78.71 points to 15,648.40 with metals and materials stocks being the biggest weights.
Shares in BlackBerry (TSX:BB) rose 15 per cent after the tech company won US$815 million from Qualcomm in a binding arbitration decision over licensing fees. Its shares finished up $1.58 at $11.85.
In New York, the Dow Jones industrial average lost 59.44 points to 20,591.86, the S&P 500 index shed 8.85 points to 2,344.93 and the Nasdaq composite index was down 30.61 points to 5,836.16.
“The market is kind of on hold until we start getting U.S. earnings reports and you start to read the body language on what managements are saying,” said Thomas Martin, portfolio manager at GLOBALT Investments in Atlanta. “We’re getting this slow churning really until we start getting some information.”
Meanwhile, investors continued to buy gold as a hedge against global uncertainty.
The June gold contract was up $3.90 at US$1,278.10 an ounce after hitting a five-month high Tuesday.
May copper contracts were down six cents at US$2.55 a pound, while May natural gas contracts were up four cents at US$3.19 per mmBTU.
— With files from The Associated Press