Investing.com - The U.S. dollar fell to the day’s lows against the Canadian dollar on Wednesday after the Bank of Canada kept monetary policy on hold in a widely anticipated decision.
USD/CAD slid 0.33% to 1.3164 from around 1.3249 ahead of the announcement.
The BoC said it was leaving its overnight cash rate unchanged at 0.5%, in line with expectations.
The simulative effects of previous monetary policy actions are working their way through the Canadian economy, the bank said.
The BoC already cut interest rates twice earlier this year, in response to the recessionary effects of low oil prices.
In its monetary policy statement the central bank said inflation remained close to the bottom of the target range, reflecting price declines in consumer energy products.
Movements in the Canadian dollar were helping to absorb some of the impact of lower commodity prices the bank said.
While the overall export picture is still uncertain, the latest data confirms that exchange rate-sensitive exports are regaining momentum, it added.
Earlier this month official figures showed that Canada’s economy expanded 0.5% in June, but contracted by an annualized 0.5% in the April-to-June period after contracting 0.8% in the first three months of the year.
Two consecutive quarters without growth means that the economy has entered a technical recession.
In July the BoC cut its forecast for economic growth this year to 1%, down from 1.9% in April.
The loonie was also higher against the euro, with EUR/CAD down 0.69% to 1.4695 from 1.4722 earlier.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 0.33% to 96.17.