Loonie down amid stable inflation data, traders look ahead to rate announcement
October 19, 2012 - 8:44 AM
TORONTO - The Canadian dollar turned weaker Friday amid data showing inflation remained stable during September while traders looked to next week's Bank of Canada decision on interest rates.
The loonie was down 0.46 of a cent to 101.07 cents US. Statistics Canada reported that the inflation rate came in at an annualized rate of 1.2 per cent, which was in line with expectations.
The bank is widely expected to leave its key interest rate at one per cent Tuesday. But traders will be interested in what the bank will have to say about when it might start upping rates.
"Speculation has risen than the statement will omit the reference that 'some modest withdrawal of the present considerable monetary policy stimulus may become appropriate', which would shift the bank from hawkish to neutral and weigh on the dollar," said Scotia Capital chief currency strategist Camilla Sutton.
Metal prices weighed on the commodity-sensitive currency as December copper lost five cents to US$3.70 a pound while December bullion backed off $9.50 to US$1,735.20 an ounce.
Oil headed higher with the November contract on the New York Mercantile Exchange ahead 29 cents to US$92.39 a barrel.
Traders were unimpressed with an agreement early Friday by the leaders of the 17 euro countries to push ahead with a single banking supervisory body. The leaders remained vague on key details, such as when the supervisor will be up and running.
Some investors and analysts worry that Europe’s politicians may have lost the incentive to fix things quickly now that market turmoil has subsided. The borrowing costs of countries like Spain have eased since the European Central Bank unveiled in September a new bond-buying program.
News from © The Canadian Press, 2012