By CountingPips.com
The Canadian dollar has gained slightly against the US dollar on the day today in forex market trading following the interest rate increase by the Bank of Canada (BOC). The Canadian currency has been mixed against the other major currencies today as the loonie has shown gains against the Japanese yen and the euro while losing ground versus the 
Australian dollar, New Zealand dollar and the British pound.
The USD/CAD currency pair currently trades around the 1.0520 exchange rate, down from an intraday high of 1.0586 and after opening the day at approximately 1.0543.
The Bank of Canada raised its benchmark interest rate by 25 basis points earlier today to 0.75 percent from 0.50 percent as widely expected by market forecasts. This marks the second consecutive month the BOC has increased the rate after a prolonged period of ultralow rates following the financial crisis.
The bank statement accompanying the rate decision said that the Canadian economy is on par with the bank’s expectations with growing employment and consumer spending as well as government expenditures and despite sub par business investment. The BOC’s revised economic outlook for Canada calls for growth by 3.5 percent in 2010 with growth sliding to 2.9 percent in 2011 and to 2.2 percent in 2012.
Despite today’s rate increase, the BOC statement warned on the outlook for the economic recovery saying, “The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank’s outlook in its April Monetary Policy Report (MPR). While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon. In the United States, private demand is picking up but remains uneven.”
Forex chart: USD/CAD Hourly – The Canadian Loonie consolidating today against the US Dollar in forex trading following the bank to Canada’s interest rate increase to 0.75%. The USD/CAD pair is trading slightly lower for second straight day and hovers around the 50-hour moving average in purple near the 1.0525 exchange rate. The pair had a gaining week last week that saw the USD/CAD increase from 1.0338 to 1.0577. The pair is now trading lower by approximately 50 pips for this week.
