The Canadian dollar weakened to the lowest level in a month versus its U.S. counterpart after the Bank of Canada reduced its growth forecast for 2013 and said economic slack will persist for more than two years.
The currency fell after the central bank lowered its 2013 growth forecast to 1.5 percent from the 2 percent it had predicted in January, after recent data in Canada, China and the U.S. trailed forecasts. Governor Mark Carney kept unchanged both his policy interest rate at 1 percent and his bias to tighten even as he lowered his growth forecast.
“Although the modest withdrawal aspect is left in the statement, the slashed growth and inflation forecasts leave plenty of room for Canadian dollar rates to price rate cuts down the line,” Shahab Jalinoos, a senior currency strategist for UBS AG in Stamford, Connecticut, said in an e-mail. “Broader issues like falling commodity prices” will propel the Canadian dollar lower, he said.
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