TORONTO: The Canadian dollar was little changed against its US counterpart on Tuesday, with the currency steadying after a recent rally as investors weighed prospects of further easing measures this week by the Bank of Canada.
Money markets expect the Bank of Canada to leave its benchmark interest rate on hold at 0.25% at a scheduled policy announcement on Wednesday but the central bank could announce other measures, such as an adjustment to its asset-purchase, or quantitative easing (QE), program.
Since the start of March, the central bank has slashed interest rates by a total of 150 basis points, in a series of emergency moves, and begun buying at least C$5 billion of government bonds per week.
"If the BoC were to loosen again at the margin, we expect it to be in their QE program," said Simon Harvey, an FX market analyst for Monex Europe and Monex Canada. "The current (C$)$5 billion of weekly purchases is a drop in the ocean compared to the US Fed's."
The US Federal Reserve has more than $5.9 trillion of assets on its books.
At 2:59 p.m. (1859 GMT), the Canadian dollar was trading nearly unchanged at 1.3903 to the greenback, or 71.93 US cents. The currency, which on Monday touched its strongest intraday level since March 16 at 1.3852, traded in a range of 1.3863 to 1.3924.
World stocks climbed after Chinese trade data came in better than expected and as some countries tried to restart their economies by partly lifting restrictions aimed at containing the coronavirus pandemic.
Canada is a major exporter of commodities, including oil, so its economy could be hurt particularly hard by global economic contraction.
The International Monetary Fund projected that global output would fall by 3% in 2020, with Canada's economy expected to shrink by 6.2%.
US crude oil futures settled 10.3% lower at $20.11 a barrel, with investors doubting that record supply cuts could soon balance markets as demand plunges due to the coronavirus pandemic.
Canadian government bond yields were mixed across the curve. The 10-year was up by half of a basis point at 0.764%.