Canadian dollar falls below 83 cents on weak factory data upcoming rate

TORONTO — The Canadian dollar fell almost a full U.S. cent Tuesday morning to its weakest level since late April 2009 amid a weaker than expected manufacturing report and a day ahead of the Bank of Canada’s next announcement on interest rates.The loonie fell 0.91 of a cent to 82.79 cents US as Statistics Canada reported that manufacturing sales fell 1.4% in November to $51.5 billion. It was the third drop in four months.The result compared with a drop of 0.7% that economists had expected.The agency says the drop was due to lower sales of motor vehicles, chemicals, primary metals and food.The central bank is widely expected to leave its key rate at one%, where it has been since September 2010 as the global economy slowly recovers from the 2008 financial crisis.But there is growing uncertainty as to the pace of rate hikes because of the collapse of oil prices and the effect this is having on the Canadian economy.Sell Canada! Investors bet against loonie, bank stocks as oil collapsesCanadian dollar strategists are already tearing up their 2015 forecasts as the loonie dives with oilHow the loonie racked up its worst performance in six years in 2014Crude prices have plunged 55% from June 2014 and are down 40% just since the end of November after OPEC ruled out production cuts to support prices.On Tuesday, the March crude contract in New York fell $1.66 to US$47.47 a barrel.Metal prices failed to find lift from data showing that Chinese economic growth for 2014 came in better than expected. Gross domestic product grew by 7.4%, better than the 7.3% read that analysts had expected but also the weakest expansion in nearly a quarter century. March copper declined three cents to US$2.58 a pound.Gold prices advanced with the February contract ahead $15.20 to US$1,292.10 an ounce.Meanwhile, the International Monetary Fund lowered its forecasts for global growth over the next two years, warning that persistent weakness in most major economies will outweigh the boost from lower oil prices. It lowered the projections it issued in October by 0.3 percentage point and now forecasts global growth at 3.5% this year and 3.7% in 2016.Traders are also looking to the European Central Bank to unveil on Thursday a major program of quantitative easing, involving the massive purchase of government bonds, to  increase inflation pressures. Economic growth has been tepid and there have been worries that the region could fall prey to deflationary pressures, a situation where businesses and consumers hold off on purchases in the hope that items will just get cheaper.

Leave a Reply

Your email address will not be published. Required fields are marked *