The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0215 level and was supported around the C$ 0.9975 level. The pair gained about 60 pips last week. BoC reduced interest rates by 25bps to 4.25% and noted global market conditions could mean inflation is subsiding. BoC noted there is an increased risk to the prospects for demand for Canadian exports as the outlook for the US economy, and in particular the US housing sector, has weakened.

Data released in Canada last week saw Ivey November PMI improve to 58.1; October building permits were up 6.8% m/m; and 43,000 new jobs were created in November.