CAD Hit by Lower Growth Expectations

The Canadian dollar was down almost half a U.S. cent Tuesday morning amid general strength in the American dollar and a day ahead of the Bank of Canada’s next announcement on interest rates.

The loonie fell 0.46 of a cent to 83.24 cents (U.S.).

The central bank is widely expected to leave its key rate at 1 per cent, where it has been since September, 2010, as the global economy slowly recovers from the 2008 financial crisis.

But there is growing uncertainty as to the pace of rate hikes because of the collapse of oil prices and the effect this is having on the Canadian economy.

Crude prices have plunged 55 per cent from June, 2014, and are down 40 per cent just since the end of November after OPEC ruled out production cuts to support prices.

On Tuesday, the March crude contract in New York fell $1.49 to $47.64 a barrel.

Metal prices failed to find lift from data showing that Chinese economic growth for 2014 came in better than expected. Gross domestic product grew by 7.4 per cent, better than the 7.3 per cent read that analysts had expected but also the weakest expansion in nearly a quarter century. March copper declined three cents to $2.58 a pound.

Gold prices advanced with the February contract ahead $13.10 to $1,290 an ounce.

via The Globe and Mail

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza