The Bank of Canada’s surprise move to lower interest rates by a quarter point could have an affect on the exchange traded fund (ETF) that tracks the Canadian dollar. The move was made, reports Greg Quinn of Bloomberg, because the dollar was rallying, making Canadian products uncompetitive and putting the brakes on inflation. The move seemed to work, because the dollar dipped to its lowest rate since September.
Officials cut the rate for overnight loans between commercial banks to 4.25%, and the bank is the second in the Group of Seven to lower its rates. It’s all part of an effort to keep August’s credit collapse from sparking a global economic crisis. Some experts suggest that this might not be the last cut from our neighbors to the north.
What does it all mean for CurrencyShares Canadian Dollar Trust (FXC)? It remains to be seen, and this is one ETF to keep an eye on for the foreseeable future.
Read the disclosure, as Tom Lydon is a board member of Rydex Investments.