Canadian dollar falls: CAD drops as equity market volatility While the rise in the global markets lost some of its vigors on Tuesday, the Canadian dollar remained within its current trading range as investors awaited the Bank of Canada’s interest rate decision this week.
While U.S. stock index futures pointed to a lower opening on Wall Street after big gains in the previous two days, European equities dipped as regional business activity data reinforced predictions that the European Central Bank will hike rates by another 50 basis points.
Since Canada is a significant producer of commodities, notably oil, the loonie is frequently affected by changes in investor sentiment.
U.S. crude oil futures were little changed at $81.64 per barrel as optimism for a recovery in fuel demand from top importer China countered worries about a global economic slowdown and the anticipated build-up of U.S. oil stocks.
Canadian dollar falls After fluctuating between 1.3347 and 1.3391, the Canadian dollar was trading 0.1% lower at 1.3380 to the dollar or 74.74 U.S. cents.
After reaching a seven-week high of 1.3320 earlier this month, the euro has generally moved in a sideways pattern.
Prior to the Bank of Canada survey, the Canadian dollar remains stable.
At its policy announcement on Wednesday, the Bank of Canada is expected to increase its benchmark interest rate by 25 basis points to a 15-year high of 4.50%, according to the money markets.
For the first time in its history, the central bank will release the minutes of its policy-setting meeting, a step that some analysts believe may help it regain the trust it lost amid last year’s skyrocketing inflation and promote creative thinking.
Across the curve, the rates on Canadian government bonds were lower. After reaching its highest intraday level in a week on Monday at 2.904%, the 10-year slipped 1.8 basis points to 2.872%.