Loonie Falls as BOC Keeps Main Rate Unchanged

The Canadian dollar slid after Canada’s central bank left its key interest rate unchanged and on concerns that strong currency may harm the nation’s economic growth. Currently the currency rose a little and moves sideway versus the euro and the US dollar.

The Bank of Canada left its overnight rate at 1 percent, as was expected by Forex market participants. The Bank explained its concerns about the strong currency in the statement:

Euro Spurred by ECB Rates Hike This Week

The euro fluctuated this week, behaving differently against different currencies, but by the end of the week the currency surged as the European Central Bank increased its main interest rate. Still, the shared European currency posted weekly losses against some stronger currencies.

The anticipated raise of the interest rates occurred and that boosted the euro in the near-term. In the longer-term doubts about ability of the European economy to survive with higher borrowing costs remain. It’s true that the major economies of the European Union, especially Germany, show strong economic growth. But the peripheral nations already face many difficulties and higher lending rates may worsen the situation. ECB President Jean-Claude Trichet attempted to ease such concerns in his speech at press-conference after the rates hike, saying:

Yen Climbs After Another Earthquake, Rates Stays Unchanged

The Japanese yen rose today on the speculation that demand from investors will shift to safe currencies from higher-yielding ones after Japan was hit by another earthquake.

Today Japan experienced yet another earthquake. The 7.1-magnitude tremor is the strongest since the earthquake on March 11 and caused the tsunami warning. Tokyo Electric Power Co. reported that the new earthquake hasn’t influenced the Fukushima nuclear power plant that was damaged by the previous earthquake. Still, this quake can switch mood among investors to risk aversion mode.

Swiss Franc Boosted by Surge of Inflation

The Swiss franc jumped against 14 of 16 most-traded currencies after the report showed that the rate of inflation growth in Switzerland unexpectedly increased in March.

The Federal Statistical Office reported the consumer prices grew 0.6 percent in March instead of expected 0.2 percent, following the advance by 0.4 percent in February. The report by SECO on April 8 is expected to show that the unemployment rate in Switzerland decrease slightly. Swiss National Bank board member Jean-Pierre Danthine said that an interest rates hike by the European Central Bank could provide a leeway for Switzerland in planning its own policy.

Australian Dollar Recovers After Losses on RBA Statement

The Australian dollar fell yesterday against the US dollar and the euro as the Reserve Bank of Australia kept its benchmark interest rate unchanged and the trade balance posted an unexpected deficit. The Aussie currently recovered against the greenback and attempts to rise against the euro, the currency also gained versus the Japanese yen.

The RBA decided yesterday to keep its cash rate unchanged at 4.75 percent, in line with the expectations of analysts. Bank’s Governor Glenn Stevens stated that the strong currency helped to control the inflation, reducing need for an increase of the interest rates. Stevens said in the statement: