The Canadian dollar rose against its U.S. counterpart after yesterday’s largest drop in more than a year as gold pared losses following a 14 percent two-day plunge that damped demand for commodity-linked currencies.
The loonie, as the currency is nicknamed, fell versus its commodity peers, the Australian and New Zealand dollars, as gold for immediate delivery gained 2.6 percent. Slower-than-forecast economic data in Canada, China and in the U.S., the nation’s largest trading partner, is projected to lead the Bank of Canada to revise down growth forecasts as it leaves its 1 percent interest rate in place at its policy meeting tomorrow. Canadian factory sales increased more than forecast in February.
“I think retracement is really the big word of the day, for not just gold, but all commodities and the commodity currencies, including the Canadian dollar,” said Greg T. Moore, a currency strategist at Toronto-Dominion Bank, by phone from Toronto. “The risks seem to be for the downside for the Canadian dollar. The Bank of Canada is obviously going to have to recognize the disappointing data that we’ve had through the first quarter.”
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