The Canadian Dollar has fallen to its lowest level in almost a month against the US Dollar as the Bank of Canada followed the International Monetary Fund’s decision in slashing the nation’s growth outlook.
The currency fell against the majority of its most traded peers as the Bank of Canada chose to lower its full year growth forecast to 1.5% from the previously expected 2% it had predicted in January, after recent data in Canada, China and the U.S. came in below forecasts. The bank, which left its benchmark interest at 1%, followed the IMF which yesterday lowered its forecast to 1.5% from 2% and said Canada’s growth will be the slowest in the Group of 20 outside of Europe.
“If you look at the Bank of Canada, the odds are they will be dovish, and maybe even more dovish than the market expects,” said Sebastien Galy, a foreign-exchange strategist at Societe Generale SA, by phone from New York. “If you look at the balance of risk, the odds are that they’re right in terms of positioning, so the Bank of Canada will basically be dovish. The risk is that they’re wrong, and because of the extent of positioning they’ll get hammered more.”
Disappointing job data in the US and Canada, as well as China’s poor GDP figures have all recently come in below economist forecasts enforcing the decline in growth expectations.
Currently the CAD/USD currency pair is trading in the region of 0.97.
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