The Canadian dollar snapped three days of gains on speculation the Bank of Canada will downgrade its economic forecasts after a government shutdown hampered growth in the U.S., Canada’s largest trading partner.
The currency rose earlier against the majority of its 16 most-traded peers before the U.S. releases data tomorrow that may show hiring picked up last month. The Bank of Canada will release a rate decision along with its monetary policy report Oct. 23. Senior Deputy Governor Tiff Macklem said earlier this month that the nation’s economy will expand more slowly than had been forecast. The U.S. government reopened Oct. 17 after a 16-day shutdown, which shaved 0.6 percentage point from annualized fourth-quarter growth, according to Standard & Poor’s.
“If nonfarm payrolls tomorrow come in as expected, or the revision comes in somewhat stronger, the danger would be for a dollar rally.” said Dean Popplewell, head analyst at the online currency trading firm Oanda Corp., by phone from Toronto. “If the U.S. numbers do come out stronger, Canada will actually benefit by association with the U.S. economy.”
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