The Canadian dollar closed little changed Thursday amid comments from the Governor of the Bank of Canada that Canadians should expect cheap borrowing costs to last for years even after the central bank gets around to raising interest rates.The loonie moved up 0.03 of a cent to end at 90.68 cents (U.S.) as traders also digested a positive outlook for exports.
Stephen Poloz told a business group in Saskatoon that the Canadian economy has room to grow but even when it returns to full capacity, likely some time in early 2016, it won’t take a big adjustment in interest rates to keep inflation in check.
The Bank of Canada has left its key rate at 1 per cent since September, 2010.
Meanwhile, Export Development Canada says renewed strength in the United States and in emerging markets, along with a lower loonie, will trigger a rebound in the lagging export sector, particularly in automobiles, building materials and appliances.
EDC chief economist Peter Hall says the volume of shipments will likely start taking off in the second half of this year and expand to 5.8 per cent growth in 2015.
Hall says the pickup in exports might have happened sooner but for the U.S. government shutdown in October and the unusually harsh weather throughout the winter.
Oil and gold prices advanced amid rising tensions between Ukraine and Russia.
June crude in New York was up 50 cents to $101.94 a barrel while June gold bullion advanced $6 to $1,290.60 an ounce.
Trading was cautious after Russia’s Defence Minister announced new military exercises in Russia’s south and west in reaction to mounting unrest in eastern Ukraine and NATO exercises in Poland. That development came just hours after Ukrainian troops killed at least two pro-Russia insurgents in eastern Ukraine, leading Russian President Vladimir Putin to threaten Kiev with unspecified consequences.
May copper ran up 6 cents to $3.12 a pound.