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Tuesday, July 20, 2010
The Canadian dollar rose against all major currencies after the country’s central bank decided to increase the target overnight rate to 3/4 percentage point on its meeting today.
The Bank of Canada announced in its statement that the interest rate is increased from 0.50 percent to 0.75 percent today. Although this decision has been expected by the majority of the market analysts, the resulting positive effect for the Canadian dollar was rather strong — it rose significantly against the U.S. dollar, the euro and the Japanese yen.
Despite the fact that the growth of the Canadian economy is slowing down, the analysts believe that the Bank of Canada may continue increasing the rates for some time, as the rate of growth of the economic output is still one of the biggest among the developed nations. Canada is now a leader by rate hikes among the G7 countries.
USD/CAD went down from 1.0545 to 1.0491 as of 17:15 GMT today. EUR/CAD dropped from 1.3654 to 1.3533, while CAD/JPY showed a growth from 82.25 to 83.11 today.