Canadian dollar loses ground on interest rate concerns
Dollar has tumbled 1 1/2 cents US since Central Bank indicates it will be slower to raise interest rates.
bank of canada
US Federal Reserve
TORONTO—The Canadian dollar was at a six-month low Monday amid lower interest rate expectations and mixed commodity prices.
The loonie was off the worst levels of the morning but still down 0.22 of a cent at 99.13 cents US nearing midday.
The dollar has tumbled more than 1 1/2 cents US since the Bank of Canada indicated last week it will be slower to raise interest rates than had been expected because of economic weakness.
The dollar has been supported in recent months partly on sentiment that the central bank might hike rates later this year. Data released Friday showing low inflation in Canada at the end of 2012 further suggested that investors will have to wait longer for the central bank to move. Higher rates tend to attract investors and push up the currency.
Statistics Canada is expected to report this week that the economy grew by 0.2% in November, which would be the highest gain in four months. Last week, the Bank of Canada shaved three-tenths of a point off its projections for growth for both 2012 and 2013, to 1.9% and 2.0% respectively.
On Monday, US data showed that durable goods orders rose by a greater than expected 4.6% in December. That was more than double the consensus forecast for a 2%. The transportation sector was largely responsible for the increase, with orders in that segment up 12%.
©The Canadian Press