The Canadian dollar closed little changed Friday as traders turn their attention to next week's interest rate announcement by the Bank of Canada.
The loonie ended well off the worst levels of the morning as commodity prices advanced, down 0.02 of a cent at 83.56 cents (U.S.).
The central bank makes its next rate announcement – and releases its Monetary Policy Report – Wednesday morning, followed by a news conference by Bank of Canada Governor Stephen Poloz.
While the bank won't be budging its key rate from 1 per cent, where it's been since September, 2010, traders will look for hints about when the bank might move later this year. There has been speculation the bank will start to nudge rates higher after the U.S. Federal Reserve moves to raise its key rate, perhaps around the middle of this year.
But oil prices have collapsed, down around 55 per cent from the highs of last summer. And some analysts think the associated economic damage from such a price fall could persuade the bank to delay any increase.
In fact, a sizable number of analysts think the Bank of Canada could actually cut rates.
"The market is now pricing in a 40 per cent chance of an interest rate cut in Canada over the next 12 months, which we think is too aggressive," said Camilla Sutton, chief foreign exchange at Bank of Nova Scotia.
Meanwhile, oil prices seem to have found some stability this past week around the $45-a-barrel mark – but only after plunging almost 40 per cent since the end of November after the Organization of Petroleum Exporting Countries ruled out cuts in production to support prices. Over all, prices are down about 55 per cent from the highs of June, 2014, amid a huge supply/demand imbalance.
On Friday, the February contract in New York was ahead $2.44 to $48.69 a barrel.
Prices were supported Friday by a report from the International Energy Agency, which said the collapse in oil prices is expected to slash growth in non-OPEC oil production this year. And it said that could, in turn, increase demand for OPEC's own output.
March copper was up 6 cents to $2.62 a pound Friday morning. Copper prices went into full retreat this week, falling below $2.49 a pound at one point in the worst performance since the 2008 financial crisis. The slide came amid weak trade data from China and a cut in the World Bank's estimate for global growth this year.
Meanwhile, gold prices gained $12.10 to $1,226.90 an ounce, adding to five strong days of advances amid expectations that the European Central Bank will move next week to launch its own quantitative easing program, which would involve the massive purchase of bonds. There has also been speculation that the U.S. Federal Reserve could delay raising interest rates this year.
Gold also got a strong boost Thursday in the wake of the Swiss National Bank's surprise decision to scrap its euro currency cap.