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ECB and BoC maintain rates

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On Wednesday, the Canadian dollar pulled back its gains versus the USD neighbor, throwing the USD/CAD pair in the 1.4630 area to test the support line. The pair started the descending after the US consumer price release. According to the data, prices did not rose as much as expected, with only 0.7% yearly to December; the CPI (Consumer Price Index) excluding energy and food came at 2.1% on a yearly basis at par with estimates.

Also in the US, fresh updates came for the housing starts and building permits which surpassed expectations for the month of December. Passing to the Canadian side, the manufacturing shipments figure came over analysts’ forecast, going up 1.0% from October to November. Also, the BoC’s (Bank of Canada) decision regarding the interest rate was released on Wednesday.

[Tweet “#BoC decided to leave the overnight rate target unchanged at 0.5%”]

Regarding the Canadian rate hike, it seems like the BoC decided to leave the overnight rate target unchanged at 0.5%, although some investors expected a 25 basis points cut. The bank’s monetary policy rate is 0.75% while the deposit rate is 0.25%. What the BoC did focus on was the grow forecast reduction for the year of 2016, saying that the Canadian economy is suffering as a result of the oil price and the commodity drop. The bank updated its projection at approximately 1.5% economic expansion in 2016 and 2.5% in 2017. At the same time, there are positive considerations on the inflation evolution, BoC considering that prices are evolving as expected within an appropriate monetary policy.

On Thursday, ECB (European Central Bank) announced that it will keep its monetary status unchanged, with the reference rate remaining at 0.05% and the margin lending facility rate at 0.30%, while the deposit interest rate is negative at -0.30%.

Draghi stated that the current monetary policy seems to work well enough, adding also that the bank’s asset purchases are proceeding according to the plan introduce in the mid-2014.

The bank’s interest rates are expecting to remain at the current or even lower rate for the time being and in the near future. He also pointed out that the increase in downside risk, the volatility’s spike in commodities and financial markets and the geopolitical crisis will keep posting threats to the Euro area.

Crude oil prices are recovering the “half-circle” on Thursday, going up to daily highs towards the $28.80 per barrel handle in EIA’s (Energy Information Administration) latest report. US’ benchmark barrel, the WTI (West Texas Intermediate) barrel, went up from Wednesday’s 13-year low around the mid-$27.00 per barrel to advanced at session highs in the upper-$28.00 per barrel area, despite the bullish tone in the greenback. It seems like investors are putting aside the supply glut issue, pushing prices forward before EIA’s weekly inventories report

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