Canada Dollar Falls as China Lending Speculation Damps Demand
The Canadian dollar touched its lowest level in a week on speculation global growth may slow if China’s central bank raises interest rates.
The currency fell against the majority of its most-traded peers before the Bank of Canada releases a monetary policy report projected to cut growth forecasts. Senior Deputy Governor Tiff Macklem said earlier this month that the nation’s economy will expand more slowly than had been estimated. Borrowing costs for Chinese banks jumped by the most since July after an academic adviser to the central bank said earlier in the week it may lean to tighter policy if inflation accelerates.
“We’ve seen the dollar rise generally from Asian hours, which to be honest I think is related to fear China could be hiking interest rates again and that’s coming through into demand for safe haven, into the dollar, into the yen, and hitting commodity currencies,” said Jane Foley, senior currency strategist at Rabobank International, by phone from London. “Canadian dollar perhaps softer going into the meeting on this Chinese news.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, fell 0.4 percent to C$1.0329 per U.S. dollar at 8:05 a.m. in Toronto. It touched C$1.0338 per U.S. dollar, the weakest since Oct. 16. One loonie buys 96.82 U.S. cents.
The Bank of Canada is forecast to keep its benchmark interest rate at 1 percent at tis 10 a.m. rate decision, according to all 23 economists surveyed by Bloomberg News.
To contact the reporter on this story: Ari Altstedter in Toronto at firstname.lastname@example.org
To contact the editor responsible for this story: Dave Liedtka at email@example.com