Loonie tumbles as Canada's shrinking economy fuels rate speculation
Related Videos
EXTENDED COVERAGE
The Canadian dollar reached the weakest level in almost six years as a report showed the economy shrank in November, bolstering speculation the central bank will cut interest rates again.
The currency headed for a 10th weekly decline, the longest losing stretch since 2000, as the government reported gross domestic product declined 0.2 percent from October. The Bank of Canada unexpectedly lowered borrowing costs last week for the first time since 2009, saying the move was meant to provide insurance as the slump in crude oil, the nation’s biggest export, weighed on the economy.
“It really looks like the economy is slowing,” Bipan Rai, director of foreign-exchange strategy at CIBC World Markets Inc., said by phone from Toronto. “It has implications for whether or not the bank will ease again in March, and right now I’m seeing a greater-than 60 percent probability we could see that.”
The loonie depreciated 1.2 percent to 78.28 U.S. cents at 8:54 a.m. in Toronto, the weakest since March 2009. It has slid 2.7 percent this week.
The Canadian currency has dropped 8.9 percent since Dec. 31 in a fifth consecutive monthly loss.
U.S. ECONOMY
The economy of the U.S., Canada’s biggest trade partner, expanded less than forecast in the fourth quarter, the Commerce Department reported in Washington. GDP grew at a 2.6 percent annualized rate, data showed, versus a forecast of 3 percent in a Bloomberg survey of economists. The economy advanced 5 percent in the third quarter.
The median forecast in a Bloomberg survey for Canada’s monthly GDP was for little change after 0.3 percent growth in October.
The Bank of Canada reduced the benchmark interest rate on Jan. 21 to 0.75 percent, from 1 percent, where it had been since September 2010.
Crude has dropped by more than 50 percent since June, when it reached a 2014 high of $107.73 a barrel in New York. It traded at $44.63 Friday.
The currency headed for a 10th weekly decline, the longest losing stretch since 2000, as the government reported gross domestic product declined 0.2 percent from October. The Bank of Canada unexpectedly lowered borrowing costs last week for the first time since 2009, saying the move was meant to provide insurance as the slump in crude oil, the nation’s biggest export, weighed on the economy.
“It really looks like the economy is slowing,” Bipan Rai, director of foreign-exchange strategy at CIBC World Markets Inc., said by phone from Toronto. “It has implications for whether or not the bank will ease again in March, and right now I’m seeing a greater-than 60 percent probability we could see that.”
The loonie depreciated 1.2 percent to 78.28 U.S. cents at 8:54 a.m. in Toronto, the weakest since March 2009. It has slid 2.7 percent this week.
The Canadian currency has dropped 8.9 percent since Dec. 31 in a fifth consecutive monthly loss.
U.S. ECONOMY
The economy of the U.S., Canada’s biggest trade partner, expanded less than forecast in the fourth quarter, the Commerce Department reported in Washington. GDP grew at a 2.6 percent annualized rate, data showed, versus a forecast of 3 percent in a Bloomberg survey of economists. The economy advanced 5 percent in the third quarter.
The median forecast in a Bloomberg survey for Canada’s monthly GDP was for little change after 0.3 percent growth in October.
The Bank of Canada reduced the benchmark interest rate on Jan. 21 to 0.75 percent, from 1 percent, where it had been since September 2010.
Crude has dropped by more than 50 percent since June, when it reached a 2014 high of $107.73 a barrel in New York. It traded at $44.63 Friday.
No comments:
Post a Comment