USDCAD, H1
Bank of Canada cuts rates by 50 bps to 0.25%. A rate reduction to the 0.25% setting was widely expected either at or before the April 15 announcement date. Governor Poloz announced: “This unscheduled rate decision brings the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic.” The Bank launched two new programs:
1. Commercial Paper Purchase Program (CPPP) to help alleviate strains in short-term funding markets and thereby preserve a key source of funding for businesses.
2. Acquisition of Government (GoC) securities in the secondary market, with purchases beginning with a minimum of C$5 bln per week across the yield curve.
The Bank is coordinating with the G7 and fiscal authorities and “stands ready to take further action as required to support the Canadian economy and financial system and to keep inflation on target.”
USDCAD rallied to 1.4155, after trading near 1.4070 and CADJPY continued to track lower breaching S2 to trade at 76.65.
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Stuart Cowell
Head Market Analyst
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