CORRECTION: Canadian Dollar Strengthens As Bank Of Canada Leaves Interest Rates Unchanged

By Joseph AdinolfiMarketsMarketWatch Pulse

The Canadian dollar strengthened on Wednesday after the Bank of Canada left interest rates unchanged but raised its growth forecast for 2017. The U.S. dollar weakened to C$1.3273 after the announcement, as the central bank was seen distancing itself from its dovish policy stance. By comparison, the U.S. currency traded at C$1.3327 late Tuesday in New York. Canada has seen economic growth accelerate over the past six months, thanks in part to a recovery in crude-oil prices. But the BOC has written off improvements in growth and the labor-market, saying they're likely due to temporary factors. Furthermore, the considerable uncertainty surrounding the fiscal-policy priorities of U.S. President Donald Trump has given the bank reason to be cautious, the central bank said in a statement. Policy makers fear that growth will suffer if Trump's protectionist rhetoric becomes official government policy. The U.S. is Canada's largest trading partner. Canadian government bond yields declined after the decision, with the 10-year off 5 basis points at 1.548%. Meanwhile, the S&P Toronto Stock Exchange Composite Index moved slightly lower.

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