A Fed rate hike sends the Loonie to a six-week low
The Bank of Canada has held its overnight rate at 2.25% through seven consecutive meetings, the most recent on September 2, and does not decide again until October 28. The Fed ended a pause of its own on Wednesday, lifting its rate to 3.75-4.00%.
The Canadian dollar weakened to a six-week low following a rate hike by the U.S. Federal Reserve. The Bank of Canada kept its interest rate at 2.25% through seven meetings, with the next decision scheduled for October 28. In contrast, the Federal Reserve raised rates to 3.75-4.00%. This rate gap, 1.625 points higher in the U.S., impacted the Canadian dollar's value.
The currency traded between 1.3980 and 1.4000 after the Fed's decision, reaching a six-week low of 1.3940. Monetary policy aims to maintain price stability and support full employment, with interest rates as the primary tool. The Fed's recent hike is expected to strengthen the USD, making the U.S. more attractive for international investments.
The Bank of Japan's continued low-interest rates may provide a new advantage, as most economies raised rates recently.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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