The Canadian dollar fell to a more than two-month low versus its U.S. counterpart on speculation the Bank of Canada will abandon its stance as the only Group of Seven central bank with a bias to tighten policy.
The loonie, as the currency is known for the image of the waterfowl on the C$1 coin, fell versus a majority of its most- traded peers. Central-bank Governor Mark Carney suggested in an Oct. 15 speech that today’s economic forecast will reflect a slow global recovery.
“While the rate decision is of course not in doubt, it is the accompanying language within the statement that will be paramount to Canadian dollar performance,” Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London, said in a note to clients.
Canada’s currency declined 0.4 percent to 99.66 cents per U.S. dollar at 7:57 a.m. in Toronto. The currency fell as low as 99.70 cents, the least since Aug. 10. One Canadian dollar buys $1.0034.
Yields on two-year government bonds fell five basis points last week to 1.09 percent, the most since Sept. 28, after Statistics Canada said Oct. 19 that the core inflation rate slowed to 1.3 percent from 1.6 percent in August, the least in more than a year. The data supported views that Carney may drop language he’s used since April that raising the policy rate “may become appropriate” as the economy approaches full output.
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