uploads///Capturecad

Canadian Dollar Rallies as Interest Rates Remain Flat at 0.5%

By

Updated

Building permits fall and interest rates are unchanged

According to a release by Statistics Canada on September 9, 2015, building permits, which represent an intention to build, fell by 0.6% in July. The figure came in below the revised increase of 15.5% in June. The value of permits to non-residential buildings fell by 13.9%, but was partly offset by the rise in value of permits to residential buildings, which rose by 8.7% with multi-family dwellings leading the pack.

Later in the day, the Bank of Canada announced that the overnight rate will remain unchanged at 0.5%. It went on to add that the expansionary policy from the previous policy meeting is working and the movement in inflation and GDP growth is in line with the July monetary policy report.

Article continues below advertisement

Canadian dollar reacts to the interest rate decision

The US dollar to Canadian dollar (USD/CAD) moved to 1.326 on the back of speculation that the Bank of Canada could go for another rate cut. USD/CAD fell to an intraday low of 1.3151 on the announcement of flat rates. Later in the day, the US dollar recovered as the US job openings number for July beat the estimates. The USD/CAD pair ended the trading day of September 9, 2015, at 1.33.

Impact on the market

Among Canadian ETFs, the iShares MSCI Canada ETF (EWC) fell by 0.88%, while the Guggenheim CurrencyShares Canadian Dollar ETF (FXC) fell by 0.31%.

The Canadian banking stocks trading on the US markets were on a negative trajectory with Bank of Nova Scotia (BNS) and Bank of Montreal (BMO) falling by 1.27% and 0.59%, respectively. The Royal Bank of Canada (RY) showed a slightly different trend and was trading nearly flat.

Advertisement

More From Market Realist