Loonie higher, trade deficit widens, markets await Bank of Canada announcement
Sep 4, 2013 / 8:56 am
TORONTO - The Canadian dollar was higher Wednesday amid data showing Canada's trade deficit with the rest of the worsened more than expected during July.
Markets also awaited the latest interest rate announcement from the Bank of Canada.
The loonie was up 0.25 of a cent to 95.22 cents US after Statistics Canada reported that the deficit widened from $460 million in June to $931 million in July.
Economists had expected the deficit would widen to $400 million.
The agency said that Canada's merchandise imports grew 0.6 per cent in July while exports declined 0.6 per cent.
It said that "lower exports of aircraft as well as unwrought precious metals and precious metal alloys were the main contributors to the decline."
The central bank comes out with its announcement at 10 a.m. EDT.
It is widely expected to leave its key rate unchanged at one per cent, where it has been since September 2010. As usual, traders will focus on the language in the accompanying statement for any indication that the central bank will move on rates before late 2014.
The major economic data from the U.S. is the release of the U.S. Federal Reserve's latest reading on the American economy. The so-called Beige Book surveys regional economic indicators and comes out at 2 p.m. EDT.
Traders also hope it will provide clues as to whether the Fed will start winding down its monthly US$85 billion of bond purchases later this month.
Commodity prices headed lower with October crude on the New York Mercantile Exchange down 53 cents to US$108.01.
December copper fell six cents to US$3.24 a pound, giving back a chunk of Tuesday's seven-cent gain that followed strong manufacturing data from China and the U.S.
Gold prices also moved lower as the December contract lost $11.70 to US$1,400.30 an ounce.
Meanwhile, traders were cautious amid worries that the U.S. will end up leading a military strike against Syria, which it accuses of using poison gas against its civilian population.
Barack Obama got a critical boost on Tuesday when House Speaker John Boehner said he backed the U.S. presidentâ€™s call for a military strike.
The U.S. says it has proof that the regime of President Bashar Assad was behind attacks that Washington claims killed at least 1,429 people.
Obama said Tuesday that heâ€™s confident Congress will authorize a military strike. Congress could vote as early as next week, after it returns from summer break.
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