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October 2015

CAD: No change on interest rates

Published: Wednesday 21 October 2015

As expected the Bank of Canada left the overnight lending rate at 0.5% but the Canadian dollar still lost a bit of ground as the central bank downgraded its growth forecasts to 2% in 2016 and 2.5% in 2017, down from 2.3% and 2.6% respectively. The bank cited the drop in oil prices as a leading factor, putting pressure on business investment and weighing on the value of Canadian exports. The downbeat assessment of the Canadian economy will push back expectations of the first interest rate hike and consequently the Canadian dollar will weaken further again the majors as the market’s attention now focuses on tomorrow’s ECB interest rate meeting.  In terms of technicals -  GBPCAD has broken up through the 20 day moving average, RSI’s crossed 50 and it’s broken up through the downtrend in place since mid-August - next upside target is 2.04 initially, possibly onto 2.056