The Canadian dollar touched the lowest level in more than a week after the Bank of Canada said its next move on interest rates could be up or down as a forecast pickup in business investment has been slow to materialize.
The currency fell against most of its major peers as the central bank held its benchmark interest rate at 1 percent for the 29th straight policy meeting, as forecast by all 18 economists in a Bloomberg News survey. The economy’s recovery “hinges critically” on a shift in demand from indebted consumers to exports and business investment, which will be aided by a weaker Canadian dollar and rising U.S. orders, the bank said as it lowered its growth forecasts for the year.
“The Bank of Canada statement was neutral, but I’d say it tilts towards the dovish, and I think a lower Canadian dollar is certainly an appropriate take from this statement,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc. “They are less confident about the export and business investment rotation they’ve talked about.”