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Canadian dollar declines ahead of Bank of Canada interest rate announcement

Canadian Press DataFile

TORONTO - The Canadian dollar was lower Tuesday, ahead of the scheduled announcement on interest rates Wednesday by the Bank of Canada .

The loonie declined 0.31 of a cent to 91.66 cents US.

The bank is expected to leave its key rate unchanged at one per cent for some time yet.

Central bank governor Stephen Poloz has maintained a dovish accent on rates and markets, which are generally expecting a rate hike in mid-2015, will look to the bank’s statement for any change in that tone.

There was positive data from Asia overnight as Japan’s government reported that average wages rose 2.6 per cent in July from a year earlier, mostly helped by bonus payments. Increases in household incomes are a crucial part of Japan’s economic revival strategy and the July figures are a rare, positive development on that front.

However, this was balanced by other data showing that China's official purchasing managers index dropped to 51.1 during August, while the private sector measure fell to 50.2, both worse-than-expected results.

Later in the morning, traders will consider the latest reading on the health of the American manufacturing sector. The Institute for Supply Management's index for August was expected to indicate slowing expansion, moving down to 56.6 from 57.1 in July, which was the strongest level since April 2011 .

On Friday, the U.S. government releases its employment report for August. Economists are looking for another strong month of job creation in the neighbourhood of 220,000.

Canadian jobs data also comes out on Friday and it is expected Statistics Canada will report that about 10,000 jobs were created last month.

Prices were mainly lower on commodity markets where October crude declined $1.09 to US$94.87 a barrel.

December bullion fell $17 to US$1,270.40 an ounce, while December copper dipped a cent to US$3.16 a pound.

© 2014 The Canadian Press. All rights reserved.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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