The BOC is desperately trying to talk down the Loonie, saying its strength more than offset the positive developments in the economy since July. The global recovery has been stronger than expected and growth in Canada better. The BOC sees 3.0 growth next year, the same forecast as in July. It sees 2011 at 3.3% from 3.5% previously. It says it has considerable flexibility in monetary policy, holding out the QE card as a warning to the market. The BOC reiterated it will hold rates at 0.25% until mid-2010.
USD/CAD trades near the highs of the day, at 1.0355 as hopes for an RBA-style rate hike any time soon are fully extinguished. Traders say a UK clearing bank bought $500 mln USD/CAD after the announcement.