CAD Drops Before Interest Rate Announcement

The Canadian dollar was lower Tuesday, ahead of the scheduled announcement on interest rates Wednesday by the Bank of Canada .

The loonie declined 0.31 of a cent to 91.66 cents US.

The bank is expected to leave its key rate unchanged at one per cent for some time yet.

Central bank governor Stephen Poloz has maintained a dovish accent on rates and markets, which are generally expecting a rate hike in mid-2015, will look to the bank’s statement for any change in that tone.

There was positive data from Asia overnight as Japan’s government reported that average wages rose 2.6 per cent in July from a year earlier, mostly helped by bonus payments. Increases in household incomes are a crucial part of Japan’s economic revival strategy and the July figures are a rare, positive development on that front.

However, this was balanced by other data showing that China’s official purchasing managers index dropped to 51.1 during August, while the private sector measure fell to 50.2, both worse-than-expected results.

Later in the morning, traders will consider the latest reading on the health of the American manufacturing sector. The Institute for Supply Management’s index for August was expected to indicate slowing expansion, moving down to 56.6 from 57.1 in July, which was the strongest level since April 2011 .

via Kitco

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