By Trang Nguyen,

THE TAKEAWAY: Bank of Canada Senior Loan Officer Survey is below zero for eight consecutive quarters > Business-lending condition is less easy than the previous quarter > Reactions on Canadian Dollar mix.

The Bank of Canada Senior Loan Officer Survey today showed that Canadian lending officers, on balance, were expected to have eased up on credit conditions in the third quarter of year 2011. The survey gathers the quarterly perspective of respondents on price and non-prices terms of business lending of Canadian financial institutions, with the results above zero indicating tightening credit terms and the figures below zero pointing to easing ones. Balance of opinion regarding overall business-lending condition for the third quarter comes in at negative 26.9, following a negative 49.6 from the previous survey. The reading also reveals the diminishing degree of consensus on easing due to rising costs of capital in some segments. Both the price and non-pricing elements of credit loosed during the third quarter, with fewer opinions on easing condition than the preceding quarter, though.

Bank of Canada Senior Loan Officer Survey: March 2007 to Present

Prepared by Trang Nguyen

Third quarter of year 2011 marked the ninth straight quarter of net easing lending conditions for corporate borrowers and sixth consecutive quarter for commercial borrowers. Besides, the balance of opinion in terms of demand for credit from financial institutions also edged up during the third quarter for “general purposes”, according to the survey.

CAD/USD 1-minute Chart: October 17, 2011

Charts created using Strategy Trader – Prepared by Trang Nguyen

Following the release, currency market has witnessed mixed reactions regarding to the loonie. As can be seen from the 1-minute USDCAD chart above, the USD/CAD pair jumped approximately 30 basis points from nearly 1.0150 to 1.0180 fifty minutes after the Bank of Canada Senior Loan Survey pointed to the easing lending condition for the eight consecutive periods. The Relative Strength Indicator crossed above 70-level, indicating overbought reactions regarding to the currency pair. Nonetheless, bullish reactions on the greenback were just short-lived. The currency pair then shifted to downward trend and the USDCAD pair immediately plunged 35 pips from 1.0180 to 1.0145. The Relative Strength Indicator fell below 30-level, signaling that foreign exchange crowd aggressively sold the greenback in favor of the loonie. At the time this report was written, the Canadian dollar traded at C$1.0154 per U.S. dollar.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2011/10/17/101711_Bank_of_Canada_Senior_Loan_Officer_Survey.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.