Bank of Canada lowers interest rates April 25/08
Forexmentor.com Forex Trading Price Action
The Bank of Canada cut interest rates for the fourth consecutive time Tuesday, April 22/08, widening the gap between Canada and rates elsewhere around the world, and dragging the loonie lower against other currencies like the euro. This makes it one of the two worst performing currencies this year – the other being the pound (also influenced by rates being cut in that country). Other currencies have fared much better – witness the rise of the euro, Australian dollar, yen and Swiss franc.
Interest rate differentials are one of the main contributing factors to the rise and fall of currencies. While soaring commodity prices should be bolstering the Canadian dollar, the Canadian dollar is being weighed down by rate cuts and Canada’s close proximity to the withering U.S. economy.
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