In European trade on Thursday (Oct 27), / choppily traded lower, temporarily trading at 1.3556, up 0.01%.
On Wednesday (Oct 26), it announced a 50 basis point rate hike, below market expectations of 75 basis points.
The surprise slowed the pace of interest rate increases as it teetered on the brink of recession.
After raising rates by 50 basis points, Canada’s policy is at 3.75%.
The Bank of Canada has raised interest rates by 350 basis points since March, in one of its fastest tightening cycles ever.
“The tightening phase will come to an end,” said Tiff Macklem, governor of the Bank of Canada. “We’re getting closer, but we’re not there yet.”
The level at which interest rates rise will depend on how demand is moderated, how supply challenges are resolved and how inflation and inflation expectations are addressed, he added.
In addition, the Bank of Canada cited the possibility of a recession, with the country’s economic growth stalling later this year and early next year, that is, between the fourth quarter of 2022 and the second quarter of 2023, with the possibility of a technical recession.
Edged higher around $1.3500 with limited upside potential, attracting some buying on Thursday and holding on to modest intraday gains during early European trade.
The pair currently sits around 1.3500, although the upside lacks bullish confidence.
