CAD Slumps on BoC by Korman Tam

10/20/2009 2:40 PM: EUR/$..1.4928 $/JPY..90.71 GBP/$..1.6366 $/CHF..1.0124 AUD/$..0.9221 $/CAD..1.0488 CAD Slumps on BoC by Korman Tam The dollar was mixed in the Tuesday session, climbing sharply higher against the Canadian dollar past the 1.05-figure while sliding versus the euro just shy of the 1.50-level. The US economic reports released earlier today were largely disappointing. The September housing starts figure missed consensus estimates for an increase to 610k units from 598k units, instead dropping to 590k units. The September building permits reading also disappointed, falling to 573k units versus 580k units a month earlier. Meanwhile, the headline PPI figures for September were weaker than anticipated, declining by 0.6% m/m and 4.8% y/y. The core PPI readings also missed forecasts, declining by 0.1% m/m and edging up by 1.8% on an annualized basis. BoC Unchanged, Drags Canadian Dollar Lower The Bank of Canada left interest rates unchanged at 0.25% when it announced its monetary policy decision earlier in the session. Although the BoC sounded an optimistic tone in its subsequent policy statement, acknowledging that “a recovery in economic activity is under way in Canada”, it cautioned that “heightened volatility and persistent strength in the Canadian dollar are working to slow growth and subdue inflation pressures”. Further, the Bank said “the current strength in the dollar is expected, over time, to more than offset the favorable developments since July”.