Forexpros – The U.S. dollar was lower against its Canadian counterpart on Tuesday, after the Bank of Canada left its benchmark interest rate unchanged in a widely expected decision.
USD/CAD hit 1.0126 during early U.S. trade, the daily low; the pair subsequently consolidated at 1.0135, declining 0.27%.
The pair was likely to find support at 1.0079, the low of December 2 and resistance at 1.0222, the high of December 1.
The BOC left its benchmark interest rate unchanged at 1.00% for the tenth consecutive month in December, citing the deterioration of global economic conditions due to the deepening of the sovereign debt crisis in the euro zone.
Risk appetite remained supported after German Chancellor Angela Merkel said European Union leaders will take important decisions to stabilize the euro zone at a summit later this week and brushed off Standard & Poor’s warning of a possible joint downgrade of euro zone nations.
S&P put the long-term sovereign-debt ratings of 15 euro zone members, including Germany, Italy and Spain on negative watch and flagged a potential two-notch downgrade for France.
The ratings agency also placed the euro zone’s bailout fund, the European Financial Stability Facility’s long-term AAA ratings on watch, adding that its long-term rating may be cut by 1 or 2 notches on review.
Elsewhere, the loonie was sharply higher against the euro with EUR/CAD dropping 0.54%, to hit 1.3549.
Also Tuesday, a report showed that the number of new building permits issued in Canada rose significantly more-than-expected in October.
Statistics Canada said the number of new building permits issued surged 11.9% after a 4.1% decline the previous month. Analysts had expected new building permits to rise 1.9% in October.
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