Loonie higher, Bank of Canada leaves key interest rate unchanged at one per cent
Sep 4, 2013 / 10:15 am
TORONTO - The Canadian dollar was higher Wednesday as the Bank of Canada left its key rate unchanged at one per cent.
The loonie was ahead 0.28 of a cent to 97.25 cents US.
The rate has been at the one per cent level since September, 2010, reflecting a tepid global economic recovery from the 2008 crash.
And the language in the announcement did nothing to dispel sentiment that the central bank likely won't move on rates until well into 2014 at the earliest. It observed that the "dynamic" of the global economy has moderated.
Earlier, data showed Canada's trade deficit with the rest of the world worsened more than expected during July. 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 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 $1.42 to US$107.12.
December copper fell seven cents to US$3.24 a pound, giving back Tuesday's gain that followed strong manufacturing data from China and the U.S.
Gold prices also moved lower as the December contract lost $25.20 to US$1,386.8 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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