33693
CAD at 12-Year Low
World Economy

CAD at 12-Year Low

Derivatives and currency traders see a growing chance that the Bank of Canada will drop interest rates back to a record low this year as the economic outlook dims abroad and at home.
The Canadian dollar fell to a 12-year low Wednesday and traders started pricing in a 50% chance of a rate cut by May, up from the 31% probability seen on Dec. 31, amid signs of economic weakness in China and declines in the price of oil, among Canada’s largest exports, Bloomberg reported.
The Bank of Canada is counting on export growth and stability in crude prices to revive the economy after what may have been the slowest annual expansion since 2009. Yet speculation is brewing that policy makers will drop their target rate a quarter-point to 0.25%, where it bottomed in 2009-2010. Private data this week showing Chinese manufacturing contracted the past 10 months renewed questions about global demand for crude, which is almost 30% weaker than a year ago.
“Maybe we’re underestimating how weak emerging markets will be to start the year; that’s something that would weigh on Canada too,” said Mark Chandler, head of Canadian fixed-income strategy at Royal Bank of Canada’s RBC Capital Markets unit in Toronto.
The Canadian dollar traded at C$1.40 per US dollar in Toronto, after touching C$1.41, the weakest since August 2003. It bought about 71 US cents.
The loonie, named for the bird engraved on the dollar coin, fell the past three years. It suffered its biggest drop since mid-December on Monday amid a global equities rout that started in China, the world’s second-biggest economy. Currencies of commodity-dependent countries such as Australia and New Zealand also slid Wednesday.

 

Short URL : http://goo.gl/EhuDQn
  1. http://goo.gl/sfnRMF
  • http://goo.gl/gfIYgI

Trending

Googleplus