CANADA FX-C$ trims losses after Bank of Canada announcement

Thu Sep 10, 2009 9:49am EDT
 
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 * Canadian dollar cuts losses after BoC announcement
 * Analysts say BoC stance on currency unchanged
 (Adds details)
 TORONTO, Sept 10 (Reuters) - The Canadian dollar CAD=D3
pared losses versus the U.S. currency on Thursday after the
Bank of Canada upgraded its economic growth outlook while
leaving its benchmark interest rate unchanged.
 As expected, the Bank of Canada kept its overnight rate
unchanged at 0.25 percent, and repeated its pledge to keep it
there until the second half of 2010. It said second half growth
could be stronger than previously thought. [ID:nBAC000322]
 The central bank once again warned that "persistent
strength in the Canadian dollar" remained a risk to the
economic recovery and to inflation, and said it could react by
taking unconventional measures as needed to support growth,
such as printing money.
 But its language on the currency was no tougher than in
recent statements and speeches.
 "We did see the currency strengthen somewhat but not in a
huge way. I think perhaps the currency market was a bit
relieved that there wasn't a stronger statement and it may have
benefited from their upward adjustment in their growth call,"
said Doug Porter, deputy chief economist at BMO Capital
Markets.
 At 9:40 a.m. (1440 GMT), the Canadian dollar was at
C$1.0833 to the U.S. dollar, or 92.31 U.S. cents, up slightly
from pre-announcement level at C$1.0856 to the U.S. dollar, or
92.11 U.S. cents.
 But that was still below Wednesday's close at C$1.0810 to
the U.S. dollar, or 92.51 U.S. cents.
 Earlier, the currency was pressured by weaker world stocks,
which diminished the appeal of assets perceived to be riskier.
 (Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)