Loonie climbs after Bank of Canada raises growth expectations

The Canadian dollar got a boost Wednesday following the Bank of Canada’s decision to raise growth expectations for the year while holding its key interest rate.

The loonie climbed 0.33 of a cent to 75.34 cents US.

The central bank announced it was keeping the rate at 0.5 per cent against the backdrop of potential risks associated with the upcoming economic policies from the U.S.

Although the move was widely anticipated, bank governor Stephen Poloz said that he was taking an interest rate cut off the table. The central bank had flirted with the idea in January when there was high uncertainty and concern surrounding the U.S. trade agenda and Canada’s economy.

“All the big players from Canada have been down to Washington and they’ve been getting along,” said Colin Cieszynski, chief market analyst at CMC Markets Canada.

“Most importantly, Prime Minister Trudeau and President Trump are getting along and the U.S. has gone out of its way to say that we’re not going after Canada. The bank’s stance has gone from neutral to dovish to a firm and solid neutral.”

The May crude contract lost 29 cents at US$53.11 per barrel.

On the markets, Toronto’s S&P/TSX composite index was down 78.71 points to 15,648.40 with metals and materials stocks being the biggest weights.

Shares in BlackBerry (TSX:BB) rose 15 per cent after the tech company won US$815 million from Qualcomm in a binding arbitration decision over licensing fees. Its shares finished up $1.58 at $11.85.

In New York, the Dow Jones industrial average lost 59.44 points to 20,591.86, the S&P 500 index shed 8.85 points to 2,344.93 and the Nasdaq composite index was down 30.61 points.

Meanwhile, investors continued to buy gold as a hedge against global uncertainty.