Skip to main content

Market News Canadian dollar hits five-week low on bets of a less cheery Bank of Canada

The Canadian dollar weakened to its lowest in more than five weeks against the greenback on Tuesday as investors bet that recent data showing slower domestic growth would leave the Bank of Canada less upbeat at Wednesday’s interest rate decision.

At 3:39 p.m., the Canadian dollar was trading 0.3 per cent lower at 1.3342 to the greenback, or 74.95 U.S. cents.

The currency, which touched its weakest level since Jan. 25 at 1.3360, has sunk 1.3 per cent since Friday, when data showed that Canada’s economy grew in the fourth quarter at the slowest pace in 2-1/2 years.

Story continues below advertisement

“People have given a real hard look at the details behind those numbers as well and what that means for the pieces that (Bank of Canada Governor Stephen) Poloz is looking to,” said Eric Theoret, a currency strategist at Scotiabank.

“The business investment disappointment is the biggest take-away and it has been one of the core components of their (Bank of Canada) optimistic narrative. With that getting thrown out the window it does look a bit more challenging to at least maintain that view that they have been communicating.”

The Bank of Canada, which has raised interest rates 125 basis points since July 2017, is widely expected to leave its benchmark rate on hold on Wednesday at 1.75 per cent.

The central bank’s estimate of the neutral interest rate is too high for Canada’s debt-laden economy, bond investors say, and a failure to lower the estimate when it is due for an annual review in April could hurt its use as a signpost for monetary policy.

The decline for the loonie came as China cancelled major Canadian agribusiness Richardson International Ltd’s registration to ship canola to China. A lasting block on Richardson’s canola exports would be a headache for Canada’s biggest grain handler and could hurt the Canadian economy.

The price of oil, one of Canada’s major exports, was little changed as the market wavered on expectations that the United States and China would reach a trade agreement as early as this month while awaiting U.S. government crude inventory data. U.S. crude oil futures settled 3 cents lower at $56.56 a barrel.

Canadian government bond prices were mixed across the yield curve, with the two-year down 0.5 cent to yield 1.749 per cent and the 10-year rising 3 cents to yield 1.892 per cent.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter