Canadian dollars (loonies) are pictured in Vancouver, Sept. 22, 2011. THE CANADIAN PRESS/Jonathan Hayward
January 20, 2014 - 6:02 AM
TORONTO - The Canadian dollar was higher Monday while traders looked to the Bank of Canada's announcement on interest rates later in the week.
The loonie rose 0.32 of a cent to 91.43 cents US on a relatively quiet day on trading desks with U.S. markets closed for the Martin Luther King holiday.
Markets will be looking for any change in the bank's language about rates in the announcement on Wednesday, along with the latest take on the economy in its Monetary Policy Report.
"We believe the rate meeting and MPR will re-affirm a dovish tone, but the central bank is likely to stop short of instituting an official easing bias," said Mark Chandler, Head of Canadian FIC Strategy at RBC Dominion Securities.
Markets will also digest two other pieces of major economic data during the week. Statistics Canada releases data on manufacturing shipments for November out Tuesday, November retail sales on Thursday and the December reading on inflation on Friday.
January has been a negative month for the Canadian dollar, which is down more than 2 1/2 cents US from the end of last month to September 2009 levels.
It has been buffeted by a variety of factors, including the central bank's dovish tone on interest rates and disappointing trade and employment data.
But it has also been pressured by an American currency which has risen as the U.S. Federal Reserve starts to cut back on its key stimulus measure, the massive monthly bond purchases that have kept long term rates low.
Meanwhile, oil and copper prices faltered following the release of data showing a slowdown in the Chinese economy.
The world’s second-largest economy grew by 7.7 per cent over a year earlier, down from previous quarter’s 7.8 per cent.
Growth for the full year was 7.7 per cent, tying 2012 for the weakest annual performance since 1999.
Factory output, exports and investment all weakened. On a quarter-to-quarter basis, economic growth dropped to 1.8 per cent from the previous period’s 2.2 per cent.
The February crude contract declined 55 cents to US$93.82 a barrel in electronic trading on the New York Mercantile Exchange.
March copper dipped a penny to US$3.34 while February bullion rose $4.30 to US$1,256.20 an ounce.
News from © The Canadian Press, 2014