The Canadian dollar was lower Wednesday morning as traders took the results of the Quebec election in stride and the Bank of Canada’s announced it was leaving its key interest rate unchanged at one per cent amid weakening global economies.
The loonie was down 0.16 of a cent at 101.28 cents (U.S.) as the central bank said that there is a widespread slowing of activity across most economies.
Specifically, “the economic expansion in the United States continues at a gradual pace, Europe is in recession and its crisis, while contained, remains acute,” said the bank in its accompanying statement.
“In China and other major emerging economies, growth is decelerating somewhat more quickly than expected from previously-rapid rates.”
The bank left intact language indicating that rates will likely rise at some point in the future.
Currency markets had minimal reaction to the victory in the election by the pro-independence Parti Québécois. The PQ failed to win a majority government, meaning it will have a difficult time advancing its sovereigntist agenda.
“Neither the Liberals nor the CAQ will provide support for any of the PQ’s hardline measures and the surprise would be if the next election is more than 18 months away,” observed BMO Capital Markets deputy chief economist Doug Porter.
Commodity prices were mixed with the October crude contract on the New York Mercantile Exchange ahead 25 cents at $95.55 (U.S.) a barrel.
December copper on the Nymex was up three cents at $3.50 (U.S.) a pound, while December bullion shed $1.10 to $1,694.90 (U.S.) an ounce.
The dollar’s negative showing Wednesday also reflected growing nervousness about the global growth outlook and what central banks can do about it.
This was underscored after FedEx delivered a profit warning, saying after the market close Tuesday that profit for the first quarter ended Aug. 29 will come up short of management’s prior projection of $1.45 to $1.60 a share. The package-delivery company cited “weakness in the global economy (that) constrained revenue growth at FedEx Express more than expected.”
Traders anxiously awaited Thursday’s interest rate announcement from the European Central Bank amid hopes the ECB will move to ease the euro zone debt crisis by addressing the high borrowing costs that have bedevilled some of the weakest members of the monetary union, particularly Spain.
Markets also looked ahead to Friday’s release of the August U.S. non-farm payrolls report to see if a weak report would persuade the Federal Reserve to embark on another round of stimulus.