USD/CAD near Two Year High at 1.0640 on Export Prospects

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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