BS: Canada Dollar Falls as Bank of Canada May Reduce Growth Outlook
The Canadian dollar touched its lowest level in almost four weeks against its U.S. peer on speculation the Bank of Canada may follow the International Monetary Fund in cutting economic growth forecasts.
The currency fell against the majority of its 16 most- traded peers before an interest-rate decision at 10 a.m. in Ottawa, where the central bank is projected to keep the benchmark interest rate at 1 percent, according to all 23 economists surveyed by Bloomberg. The IMF cut its 2013 Canadian growth forecast to 1.5 percent from 2 percent yesterday, and traders are speculating bank governor Mark Carney, whose latest prediction from January was also 2 percent, will follow suit.
“If you look at the Bank of Canada, the odds are they will be dovish, and maybe even more dovish than the market expects,” said Sebastien Galy, a foreign-exchange strategist at Societe Generale SA, by phone from New York. “If you look at the balance of risk, the odds are that they’re right in terms of positioning, so the Bank of Canada will basically be dovish. The risk is that they’re wrong, and because of the extent of positioning they’ll get hammered more.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, fell 0.5 percent to C$1.0262 per U.S. dollar at 8:05 a.m. in Toronto. It touched C$1.0265 per U.S. dollar, its lowest since March 21. One loonie buys 97.45 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
