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Canadian dollar weakens ahead of Bank of Canada rate announcement

Canadian dollar coins, or Loonies, are displayed on a map of North America January 9, 2014 in Montreal. THE CANADIAN PRESS/Paul Chiasson
January 17, 2014 - 5:44 AM

TORONTO - The Canadian dollar was lower Friday as the currency continued to weaken ahead of next Wednesday's Bank of Canada interest rate announcement.

The loonie fell 0.38 of a cent to 91.15 cents US.

The currency has already shed almost three cents US this year for a variety of reasons, including poor trade and employment data and an American currency that has risen as the Federal Reserve starts to cut back on its massive bond buying program.

Canada's dollar has also been pressured by the central bank's dovish stance on interest rates, which aren't expected to rise until next year.

The outlook is more pessimistic in some quarters. Analysts observe that currency markets are currently pricing in a 20 per cent chance of an interest rate cut this year.

On the commodity markets, the February crude contract on the New York Mercantile Exchange rose 72 cents to US$94.68 a barrel.

March copper gained two cents to US$3.36 a pound while February bullion rose $3 to US$1,243.20 an ounce.

On the economic front, U.S. housing starts fell 9.8 per cent to an annual rate of 999,000 during December following an impressive 23.1 per cent gain during the previous month. Still, home construction chalked up its best year since 2007 during 2013.

Other data showed building permits slipped three per cent during December.

Markets will also take in the latest reading on industrial production later in the morning. Economists looked for production to rise 0.2 per cent in December after November's solid 1.1 per cent jump.

News from © The Canadian Press, 2014
The Canadian Press

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