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Canadian Dollar Weakens Ahead of BOC Business Outlook

H.S. Borji
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Canadian Dollar Weakens Ahead of BOC Business Outlook

The Canadian dollar was softer Monday, as investors shifted their attention to the Bank of Canada’s quarterly Business Outlook. The loonie topped 91 US cents at the end of last week after the federal statistics agency said the country added 42,900 jobs last month.

The BOC will release its quarterly outlook Monday, giving the forex market a closer look at Canada’s short-term economic situation through the eyes of 100 executives. The previous release showed Canadian businesses were generally optimistic that sales, investment and hiring would improve this year, but were also concerned weak demand and domestic uncertainty could weigh on their prospects.

Canadian investors use the quarterly report to gauge future interest rates, sales and job creation. Today’s report could reveal whether BOC Governor Stephen Poloz was right in tempering expectations about economic growth. According to Poloz, slow economic growth could be the new norm for Canada.

The Canadian economy expanded at an annualized rate of 2.9 percent in the fourth quarter, exceeding forecasts. According to a recent forecast from the Bank of Nova Scotia, the BOC will lag the US Federal Reserve in raising interest rates. Policymakers at the Federal Reserve forecast US interest rates to be 1 percent at the end of 2015 and 2.25 percent a year later.

In the early North American session, the USDCAD currency pair was trading at 1.1000, up 0.2 percent. The pair traded within a range of 1.0967-1.1012. The upper end of the daily range represents initial resistance. On the downside, technical support is likely found at 1.0925.

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