TORONTO – The Canadian dollar closed lower Wednesday as the Bank of Canada announced it would be leaving its key rate unchanged and edged its economic growth forecast for 2014 up slightly.
The loonie lost 0.12 of a cent to 88.94 cents US, pressured by falling commodities as oil closed at a two-year low.
The central bank left its key rate at one per cent, where it has been since September 2010.
In its monetary policy report, released at the same time as the rate announcement, the bank adjusted its July prediction for economic growth this year, nudging it up one-tenth of a point to 2.3 per cent for 2014.
The central bank pointed to rock-bottom borrowing rates as a contributor to “renewed vigour” in consumer spending and the real estate market since July.
The bank signalled it’s in no rush to do anything about hiking rates in the near future.
“(It) is the very essence of neutral,” said BMO Capital Markets chief economist Doug Porter.
“For every negative, there’s a positive. For every fading concern, there’s an emerging risk. In other words, the bank’s main point is that it feels zero urgency to do anything with rates, either up or down.”
A morning media briefing that was planned by Bank of Canada governor Stephen Poloz was cancelled due to a morning shooting incident and lockdown at Parliament Hill. Bank officials later released the prepared text that he was to deliver.
Traders also considered data showing a worse than expected reading on retail sales in August. Statistics Canada reported retail sales fell 0.3 per cent overall in August, versus a flat reading that had been expected by economists.
Commodity prices were lower with the December crude contract in New York down $1.97 to U$80.52 a barrel, oil’s lowest settlement since June 28, 2012.
The plunge came amid downward pressure on the euro, which drove up the value of the U.S. dollar. Commodities are priced in the U.S. currency. Also, data showed U.S. crude supplies rose by 7.1 million barrels last week, about three times more than expected.
December copper slipped a penny to US$3.02 a pound, while December gold bullion faded $6.20 to US$1,245.50 an ounce.