The Canadian dollar held above 1.38 per US dollar, easing from two-month highs of 1.38 reached on December 5 as investors digested the Bank of Canada decision and guidance. The Bank of Canada’s December hold at 2.25% reiterated that policy is about right because growth and labour market surprises have narrowed slack. Third-quarter GDP surprised to the upside with annualized growth of 2.6% and the labour market added significant jobs as the unemployment rate fell to about 6.5%. Those developments reduce the near-term odds of easing and tilt the balance toward later tightening if underlying inflation proves persistent. On the other hand, oil, Canada’s largest export price, has eased from its early-December spike, removing a key terms-of-trade tailwind for the loonie. The Bank also flagged that recent GDP strength largely reflected volatile trade and that fourth-quarter growth may be weaker, undercutting confidence in a durable domestic upswing.