The Canadian dollar is trading sideways on Monday ahead of an important announcement on interest rates by the Bank of Canada (BOC). The loonie is also struggling to find an upwards direction because of sliding crude oil prices, weak economic data, and a rallying greenback.
According to Statistics Canada, national wholesale trade tumbled by 0.1% in August as the market projected a 0.2% jump. The disappointing numbers stem from weaker building material, motor vehicle, and supply sales. Retail sales dropped 0.1% in August and the consumer price index (CPI) slowed to 2.2% last month.
Crude oil prices did not help lift the loonie to kick off the trading week. November West Texas Intermediate (WTI) futures dipped $0.20, or 0.29%, to $68.92 per barrel on the New York Mercantile Exchange. Oil prices slid on reports that the Saudi Arabian government would raise its crude output levels amid tensions with the rest of the world over the murder of a journalist.
For much of 2018, the growth in energy prices did not affect the loonieâs performance, but with a newly negotiated trilateral agreement â the USMCA â the currency has been taking its cues from oil in recent weeks.
Later this week, the central bank will convene its October policy meeting, where money markets bet that officials will raise interest rates by 25 basis points to 1.75%. This would be the fifth rate hike since July 2017.
Ostensibly, China has contributed to the dollarâs performance over the last 24 hours. Chinese President Xi Jinping announced that the government would offer stimulus to help stabilize the national economy and spur growth. In addition to investing money into key sectors of the economy, Xi vowed widespread tax cuts. The move launched a rally in the equities market, which created a ripple effect in Europe.
The USD/CAD currency pair rose 0.05% to 1.3112, from an opening of 1.3105, at 17:29 GMT on Monday. The GBP/CAD tumbled 0.65% to 1.7009, from an opening of 1.7121.
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