Canadian dollar declines ahead of Bank of Canada rate announcement
TORONTO - The Canadian dollar was lower Monday morning as traders digested a strong read on Chinese manufacturing and looked ahead to key domestic data coming out this week.
The loonie slipped 0.15 of a cent to 92.08 cents US two days before the Bank of Canada delivers its next announcement on interest rates. The key rate will stay unchanged at one per cent, where it's been since September 2010.
Economists will look to see if the central bank continues to flag concerns about low inflation being the No.1 concern since inflation has been heading higher recently.
Canada's annual inflation rate climbed to its highest level in two years, reaching two per cent in April, largely driven by an unusually big jump in energy prices.
Canadian job figures for May come out Friday and economists expect about 21,000 jobs were created after the economy shed 29,000 the previous month.
Statistics Canada will also release the merchandise trade balance for April on Wednesday. Economists expect it to show a $100 million surplus.
Meanwhile, copper prices got a lift from strong Chinese manufacturing data.
The July copper contract was up four cents to US$3.16 a pound after the China Federation of Logistics and Purchasing said that its monthly manufacturing index rose to 50.8 points in May, up from Aprilâ€™s reading of 50.4 and was the highest level this year. Any reading above 50 indicates expansion.
Elsewhere on the commodity markets, July crude in New York was up a dime to US$102.81 a barrel.
July bullion headed 80 cents higher to US$1,246.80 after losing 3.5 per cent last week with markets feeling more comfortable about the Ukraine crisis and more concerned about deflation rather than inflation, particularly in Europe.
It is widely expected that European Central Bank president Mario Draghi will announce measures on Thursday aimed at raising inflation from very low levels and encouraging a lacklustre economic recovery.
It's also a busy week for economic reports in the U.S.
On Monday, traders will take in the latest reading on the health of the American manufacturing sector. Economists expect the Institute for Supply Management's index for May to come in at 55.5, up from 54.9 in April.
Economists also forecast another month of strong job gains in the U.S. They expect the government's non-farm payrolls report coming out Friday will show that the American economy cranked out about 219,000 jobs following a much stronger expected 288,000 gain in April.
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