By Commodity News Service Canada
Winnipeg, January 21 – The Canadian dollar saw enormous losses on Wednesday, dropping nearly two full cents against the US dollar, just a day after dropping a penny.
The Canadian dollar’s losses were linked to news that the Bank of Canada unexpectedly cut its key interest rate to 0.75 per cent, from its previous one per cent. Pre-report guesses called for the bank to maintain the one per cent rate.
The Bank of Canada also expects Canada’s real gross domestic product growth will slow to 1.5 per cent during the first half of 2015 due to falling oil prices, which was bearish for the loonie.
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At 11:41 CST Wednesday, the Canadian dollar was trading at US$0.8073 or US$1=C$1.2387, which compares with Tuesday’s North American close of US$0.8260 or US$1=C$1.2107.
Further downward pressure came from recent weak Canadian manufacturing data and ongoing worries about slow global economic growth.
Softness in gold prices was also weighing on the Canadian dollar, though a small rebound in oil prices on Wednesday was slightly supportive.
The Toronto Stock Exchange was up 287.98 points, or 2.01%, at 11:41 CST Wednesday, to sit at 14,596.42.
