GB: Canadian dollar up slightly, Bank of Canada leaves interest rate unchanged
TORONTO - The Canadian dollar was little changed after the Bank of Canada's left its key rate unchanged at one per cent.
The loonie was up 0.03 of a cent to 98.58 cents US as the bank also maintained language in its accompanying statement which signalled an eventual tightening bias, indicating that rates would rise at some point.
"Its tightening bias is kept intact by sticking to the view that next year will be a bit better than this year, with a 2.3 per cent pace, (2.4 per cent previously) enough to close the output gap by the second half of the year," said CIBC World Markets chief economist Avery Shenfeld in a commentary.
The bank observed that global growth prospects have weakened since the Bank’s April Monetary Policy Report.
It noted that "while the economic expansion in the United States continues at a gradual but somewhat slower pace, developments in Europe point to a renewed contraction."
"In China and other emerging economies, the deceleration in growth has been greater than anticipated, reflecting past policy tightening and weaker external demand," the bank said in a statement.
Markets got a sharp reminder of deteriorating growth Monday as data showed U.S. retail sales fell in June for the third straight month. Also, the International Monetary Fund shaved its estimate for global growth for this year and next. And the IMF warned that Europe’s financial crisis and a potential budget crisis in the United States could slow world growth even further next year.
Hopes are growing that a recent spate of disappointing data will persuade central bankers to embark on more stimulus.
Traders hoped that U.S. Federal Reserve chairman Ben Bernanke would announce further measures in a speech later in the morning.
Commodity prices were mixed with the August crude contract on the New York Mercantile Exchange ahead 58 cents to US$89.01.
Copper was unchanged at US$3.49 a pound while bullion dipped $4.50 to US$1,587.10 an ounce.
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