The Canadian dollar closed higher Wednesday after the Bank of Canada said it was leaving its key rate unchanged at 1 per cent.
The loonie was ahead 0.4 of a cent to 96.6 cents (U.S.) as the central bank also said that the 1 per cent level is “appropriate for a period of time.”
It added that “recent economic indicators suggest that growth in the first quarter was stronger than the bank projected in April.”
That assessment came as the Organization for Economic Co-operation and Development said the recession in Europe risks threatening the world’s economic recovery.
In its semi-annual update, the OECD again slashed its forecast for the 17 European Union countries that use the euro, saying its economy will shrink by 0.6 per cent this year, after a 0.5 per cent drop in 2012.
The U.S. economy will continue to outpace Europe, the OECD said, with growth of 1.9 per cent in 2013 and 2.8 per cent in 2014. It projects Canada’s growth will be slower than the United States, with a 1.4 per cent advance this year and 2.3 per cent next year.
Also, the International Monetary Fund trimmed its growth forecast for China this year from 8 per cent to 7.75 per cent due to weaker global demand but said the Chinese economy should remain robust.
The IMF also warned that China needs to make a “decisive push” to launch new market-oriented reforms and has to control rapid credit growth that could lead to financial problems.
The glum economic outlooks depressed oil and copper prices with the July crude contract on the New York Mercantile Exchange down $1.88 to $93.13 a barrel.
July copper slipped 2 cents to $3.30 a pound while June gold gained $12.40 to $1,391.30 an ounce.