The Canadian dollar fell to the lowest level in two years as weak exports added to concern expressed by Bank of Canada policy makers that a projected driver of economic growth has not yet materialized.
The currency depreciated for a second day before a central-bank meeting Dec. 4, when policy makers are projected to hold the benchmark interest rate at 1 percent. A report last week showed third-quarter economic growth was the fastest in two years even as exports fell, frustrating the Bank of Canada’s expectations for trade to drive growth as over-indebted consumers pare back.
“This is confirmation that the overall direction for dollar/Canada is higher still, or lower for the Canadian dollar,” Mark Frey, chief market strategist at Cambridge Mercantile Group, a global foreign-exchange and payments provider, said by phone from Victoria, British Columbia. “The market is tending to believe the overall story — the Bank of Canada is going to remain overtly dovish — and we should see the Canadian dollar trade heavy.”
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