Wednesday September 5, 2007 - 10:14:29 GMT
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INVESTICA Ltd - www.investica.co.uk
Canadian dollar waits for BOC view
The Canadian dollar strengthened to test levels below 1.05 against the US dollar in US trading on Tuesday before retracing gains on Wednesday. Currency moves are still being influenced strongly by global stock market trends with Canadian dollar gains reversed as markets failed to hold gains.
The possibility of an early general election this Autumn failed to have a big impact on the markets, but the domestic influences will be important on Wednesday. The Bank of Canada is likely to keep interest rates on hold at 4.50% following the monetary meeting and the bank statement will be watched very closely. Hints over a near-term increase in interest rates would provide important support to the local currency.
Overall, the bank is likely to take a more neutral stance and the Canadian dollar will find it difficult to sustain any renewed gains beyond the 1.05 level against the US dollar.
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