The Canadian dollar touched a three-year low as traders increased bets the Bank of Canada will signal the possibility of a rate cut at today’s policy announcement. The currency was little changed as the economy of Canada’s commodity exporting peer, Australia, expanded less in the third quarter than economists forecast. The yield on bankers’ acceptance contracts, a gauge of short-term interest rate expectations, fell to a seven-month low before the Bank of Canada meeting where policy makers are forecast to keep the benchmark rate at 1 percent, according to a Bloomberg survey. “A lot of people are positioning for a dovish shift,� said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc, by phone from Toronto. “People are moving from, ‘the Bank of Canada is going to hike rates some time,’ to, ‘well, maybe they’ll cut rates.’ That shift in opinion is still kind of playing out in the Canadian dollar.� The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, traded at C$1.0654 per U.S. dollar at 8:02 a.m. in Toronto. Earlier it touched C$1.0678 per U.S. dollar, the lowest since June 2010. One loonie buys 93.86 U.S. cents. To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Source