The Canadian dollar traded at almost its lowest level in eight months against its U.S. counterpart amid speculation the Bank of Canada may drop its bias toward raising interest rates at today’s policy meeting.
The currency pared losses as global stocks gained on increased risk appetite. The central bank is forecast to hold its target rate at 1 percent, according to all 22 economists surveyed by Bloomberg. Governor Mark Carney reiterated on Feb. 25 that rate increases are less urgent amid signs of slowing growth.
“The Bank of Canada is going to be somewhat cautious in its assessment of the end of 2012 and maybe revising down some of its outlook for 2013,” said David Tulk, chief macro strategist at Toronto-Dominion Bank (TD)’s TD Securities unit, by phone from Toronto. “We think the bank still does want to send the message to the market that the overnight rate will move higher, but maybe not for some time.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, was little changed at C$1.0270 per U.S. dollar at 8:55 a.m. in Toronto. One loonie buys 97.37 U.S. cents. The loonie touched C$1.0342 per U.S. dollar March 1, the lowest level since June 28.
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