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FX Central Bank Watch : Canadian Dollar (CAD) and New Zealand Dollar (NZD) Forecast Deteriorates

September 10, 2015 - Written by Frank Davies

Latest Forex News: BOC & RBNZ Interest Rate Decisions Impact NZD, CAD Exchange Rate Trading



The past 24hrs has seen the publication of monetary policy announcements from two leading global central banks and the upshot has had a pronounced effect on the relative value of the Pound Sterling (currency : GBP) against more than one of the other most widely-traded global currencies.

Canadian Dollar ALERT: CAD Stronger against GBP, USD as BOC Holds Rates



The Bank of Canada (BoC) led the way yesterday afternoon. The BoC’s decision to maintain its key lending rate at its current record low of 0.50% had been largely priced-in by investors holding the Canadian Dollar (currency : CAD), but the tone of the commentary released at the same time by the Canadian central bank did catch a few market participants on the back foot. The BoC struck an upbeat tone in its rhetoric, observing that, ‘economic activity continues to be underpinned by solid household spending and a firm recovery in the United States with particular strength in the sectors of the U.S. economy that are important for Canadian exports.’

GBP-CAD Tumbles from Best Rate Levels after Rate Decision



The fall-out from these words saw the Loonie claw back recent lost ground against the Pound Sterling, sending the Pound Canadian Dollar exchange rate briefly back down into the 2.0200s GBP CAD. However, the pair proved unable to hold at these levels and it ended the day lodged back up in the 2.0300s. The BoC’s observation that its domestic economy is taking time to adjust to the sharp drop-off in global oil prices since the turn of the year limited any gains for the Loonie; the suggestion from the BoC that, ‘these adjustments are complex and are expected to take considerable time,’ is forecast to throttle support for the Canadian tender into the medium term.

British Pound to New Zealand Dollar (GBP-NZD) Exchange Rate Gains after RBNZ Rate Cut



Meanwhile, last night’s session brought the latest monetary policy announcement from the Reserve Bank of New Zealand (RBNZ). As anticipated, the Kiwi central bank trimmed its Official Cash Rate by 25 basis points for the third time on the trot. The accompanying RBNZ statement predicted ‘further easing’ for later in the year and the Pound New Zealand Dollar exchange rate spiked as a result. The upshot sent GBP NZD back above 2.4500 GBP NZD and analysts forecast further gains to come for this volatile pair.

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