CANBERA (dpa-AFX) - The Canadian dollar strengthened against its major counterparts in the New York session on Wednesday, as the Bank of Canada cut the policy rate by 50 basis points and said that it will evaluate the need for additional easing.
The central bank lowered its target for the overnight rate to 3.25 percent, with the bank rate at 3.50 percent and the deposit rate at 3.25 percent.
The Canadian central bank said the decision to continue slashing rates is intended to support growth and keep inflation close to the middle of the 1-3 percent target range.
Noting that rates have been reduced substantially since June, the BoC said the need for further rate cuts would be evaluated 'one decision at a time.'
'Our decisions will be guided by incoming information and our assessment of the implications for the inflation outlook,' the BoC said. 'The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.'
In its statement, the BoC noted the possibility U.S. President-elect Donald Trump's incoming administration will impose new tariffs on Canadian exports to the U.S. has increased uncertainty and clouded the economic outlook.
The loonie rose to a 6-day high of 1.4821 against the euro, more than 4-month high of 0.8983 against the aussie and near a 2-week high of 107.90 against the yen, off its early lows of 1.4947, 0.9048 and 106.48, respectively. The currency is likely to locate resistance around 1.46 against the euro, 0.89 against the aussie and 109.00 against the yen.
The loonie advanced to a 2-day high of 1.4119 against the greenback, from an early 4-1/2-year low of 1.4198. If the currency rises further, it is likely to test resistance around the 1.38 region.
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