Bank Of Canada Cuts Rates By 50 Basis Points As Expected

The Bank of Canada cut rates by 50 basis points to 1.0%

Below are the headlines from the statement.

• FURTHER MONETARY STIMULUS MAY BE NEEDED
• RATE NOW LOWEST SINCE CENTRAL BANK’S FOUNDING IN `34
• INFLATION RETURNING TO 2% TARGET BY MID-2011
• THE CANADIAN ECONOMY WILL SHRINK BY 1.2% IN 2009
• WORLD ECONOMY OUTLOOK DETERIORATED SINCE DECEMBER
• CANADA DEMAND ERODING ON FALLING INCOME AND WEALTH
• ECONOMY TO GROW BY 3.8% IN `10 ON POLICY, CURRENCY
• STABILIZATION OF MARKETS PRECONDITION FOR RECOVERY
• HEIGHTENED UNCERTAINTY HURTING CONFIDENCE GLOBALLY
• CANADA CORE INFLATION TO BOTTOM AT 1.1% IN Q4 `09
• CANADA TO CAREFULLY’ ASSESS NEED FOR MORE STIMULUS
• TOTAL CPI BELOW ZERO FOR 2 QUARTERS IN `09 ON ENERGY

From a technical perspective, the USD/CAD remains supported on the back of the Canada weakness. The pair has in its sites the triple top at the 1.3016 level.  The 1.2672 level is the high from January 15th. The price action has taken the pair above this level but the price has moved back below on profit taking.  Another break will be needed to propel the pair higher.

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