Although the Canadian Dollar dropped against its American counterpart as crude oil, one of Canada’s main exports, fell to a four-month low, the ‘Loonie’ surged against the Yen.
The Canadian Dollar Exchange Rate was in the region of 0.9845 against the US Dollar as of 14:19 pm GMT
The ‘Loonie’ jumped by 2.5 per cent against the Japanese Yen, its most significant rally for over a year, following the Bank of Japan’s latest policy meeting – the first with Haruhiko Kuroda as Governor.
Prior to the meeting Kuroda pledged to bring inflation to the central bank’s target within two years, and speculation regarding what steps he would sanction has been steadily mounting.
In the end the BOJ decided to double its monthly bond purchases to 7.5 trillion Yen, a move which triggered widespread declines in the currency and allowed the Canadian Dollar to trade in the region of 93.99 Yen.
After the central bank’s announcement the Yen dropped to a 17-month low against the US Dollar.
Peter Kinsella of Commerzbank AG said of the news: ‘The BOJ certainly surprised to the upside of expectations. They’ve done everything that’s required to start a reflation of the economy. It’s very clear the direction is to sell Yen and it’s going to weaken further.’
Meanwhile, Toronto-based strategist Mazen Issa remarked: ‘That upward momentum in the CAD/JPY cross may have some more legs moving forward, given that the BOJ is sounding even more dovish than people assumed and will likely continue to be very dovish in the months ahead. Everyone’s just turning their attention towards external events and we’re looking for any sort of domestic catalyst to provide some direction on the Canadian Dollar and that’s likely to come from employment tomorrow.’
Last month’s Canadian employment data wildly exceeded expectations and economists are forecasting another gain, this time of 5,000.
Although US initial jobless claims were shown to have risen to a 16-week high in a report released today, if tomorrow’s US employment data shows improvement the ‘Loonie’ could be boosted further.
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