TORONTO: The Canadian dollar fell on Wednesday against its US counterpart after the Bank of Canada held interest rates steady and showed enough caution to dampen expectations for a hike early next year.
The central bank left its benchmark interest rates on hold at 1 percent, as expected. Despite rising employment and participation rates, other indicators point to ongoing - albeit diminishing - slack in the labor market, the central bank said.
Investors had been interested in how the Bank of Canada would characterize the labor market after data on Friday showed a much stronger-than-expected jobs gain in November.
"I think on balance their overwhelming focus remain on the uncertainties so they provided no clue of a rate hike anytime soon," said Derek Holt, head of capital markets economics at Scotiabank.
Chances of a rate hike in January fell to 28 percent from 41 percent before the announcement, the overnight index swaps market indicated.
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