CAD/NOK settles above 40-month low, posts weekly gain

The CAD/NOK currency pair settled above recent low of 7.0916, its weakest level since May 23rd 2022, in the wake of the Bank of Canada’s and Norges Bank’s policy decisions.

The Bank of Canada cut its benchmark interest rate by 25 basis points to 2.50% at its September 17th policy meeting, in line with market consensus.

The decision followed three consecutive holds.

Policy makers highlighted the Canadian economy showed signs of fragility to US tariffs after an initial period of resilience. This was evidenced by a 1.6% GDP contraction in the second quarter amid a 27% drop in exports.

At the same time, CPI inflation was below the 2% target in August, creating room for easier policy to address growth concerns.

Meanwhile, Norges Bank lowered its key policy rate by 25 basis points to 4% at its September meeting, as anticipated.

It has been the second rate cut in five years after the brief pause in August.

Norges Bank signaled that it would continue easing policy next year in case the economy developed as expected.

The central bank noted that the policy rate would likely be gradually reduced to 3% in upcoming years, while inflation is forecast to steady near 2% by 2028.

The exotic Forex pair gained 1.37% for the week.