The Canadian dollar fell to an almost 10-week low versus its U.S. counterpart as the Bank of Canada’s reduced growth forecast and less emphasis on raising interest rates weighed on investor optimism on the economy.
The currency traded below parity for a second day after the central bank cut its forecast for growth this year to 2 percent from an October forecast of 2.3 percent. Canada’s dollar also dropped below its 200-day moving average versus the greenback for a second day.
“There’s been a follow-through and more digestion after those comments from the BOC yesterday,” Greg Moore, a currency strategist at Toronto-Dominion Bank (TD), said in a telephone interview. “The comments were certainly more dovish than anyone was really expecting.”
Canada’s currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, depreciated 0.2 percent to C$1.0013 per U.S. dollar after earlier falling to C$1.0025, its lowest level since Nov. 16. One Canadian dollar purchases 99.87 U.S. cents.
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