The Canadian dollar reached a four-year low for a second day on speculation the nation’s central bank may signal at a meeting next week the need for lower interest rates amid faltering economic growth.
The currency erased losses as crude oil, Canada’s biggest export, climbed amid a drop in U.S. inventories. The loonie, as the currency is called, has fallen this month against 15 of 16 major peers as interest-rate expectations between the U.S. and Canada diverged, with the Federal Reserve slowing monetary stimulus. Bank of Canada officials meet Jan. 22, when they will also release a quarterly report on their view of the economy.
“People are starting to get the view the Bank of Canada is certainly not going to be raising rates, but might actually turn more dovish or even open the door to rate cuts,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc, by phone from Toronto. “You’re getting to the sell-Canada kind of story.”