In a surprise move, the Canadian Central Bank raised the overnight lending rate by 25 basis-points to 1.00% and kept the door open for more rate hikes this year. Even as the institution vowed to focus on how higher borrowing costs will impact Canada’s indebted households, an unexpectedly strong economy was behind the latest monetary tightening effort.
Canada reported a 4.50% annualized pace of growth during the second quarter, data from Statistics Canada showed last week, marking the strongest first half growth since 2002. USDCAD slipped close to -2.00% during Wednesday’s session after the announcement was made. An appreciation in the local currency typically accompanies a rate hike as investors seek better returns on their cash deposits. In the meantime, the pair was last seen around the 1.2230-mark after finding new support.