Canadian dollar leads as BoC raises the bar on hawkishness - BNN Bloomberg

The so-called loonie climbed against all of its Group-of-10 peers, advancing as much as 0.7 per cent against its US counterpart to CUS$1.2937 per greenback. Short-end Canadian rates leaped after the Bank of Canada shocked traders with a 100-basis-point move in its benchmark rate, extending an earlier advance fueled by hotter-than-anticipated US inflation figures. The two-year bond yield rose as much as 19 basis points to 3.4 per cent.

The actions of the BOC “will really help shield the loonie from further downside pressures stemming from commodity and equity benchmarks,” said Simon Harvey, an analyst at Monex Europe Ltd. The dollar-loonie pair has struggled to make inroads above 1.3, and he thinks this dynamic “will persist over the coming weeks.”

The decision came after consumer-price inflation numbers from the US added fuel to bets that the Federal Reserve is also likely to be firm in its hawkishness, with traders jacking up bets on the prospect that the US central bank might also lift by 100 basis points this month.

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