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Loonie falls more than half a cent after Bank of Canada speech in BC

Toronto -- The Canadian dollar was more than half a cent lower near midday Tuesday, Oct. 16, 2012, dropping to its lowest value against the US dollar in nearly two weeks.


Toronto — The Canadian dollar was more than half a cent lower near midday Tuesday, Oct. 16, 2012, dropping to its lowest value against the US dollar in nearly two weeks.

The loonie was down 0.51 of a cent at $101.51, but off its lows for the day when it was down 0.83 cents.

The drop takes the loonie to its lowest level since Oct. 4, 2012, when it began to strengthen against the US dollar.

Some currency watchers attributed the loonie’s latest weakness to a speech Monday by Bank of Canada governor Mark Carney that was notable for what he didn’t say and interpreted as a more dovish tone toward the possibility of interest rate increases.

Carney did not include in his speech an often-repeated line that “modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”

The central bank’s pronouncements are closely watched by economists as a signal of changes in interest rate policies, which can affect the value of currency rates.

“Accordingly, in line with our expectations, it is likely that the BoC adopts a more neutral stance at its upcoming meeting,” wrote Scotiabank chief currency strategist Camilla Sutton in a note.

“The domestic impact is being felt on exports, capital expenditures and employment, but since Canada is viewed as an attractive investment destination capital inflows are pushing up the value of the Canadian dollar,” she added.

The Bank of Canada also issued Monday a quarterly business survey that suggested the corporate sector that is far more concerned about the future than it was only three months ago.

In commodities, December gold bullion rose $7.60 to US$1,745.20 an ounce, while TSX gold stocks were up 2.1%. Copper prices were relatively unchanged with the December contact at US$3.70 a pound.

Oil prices were slightly higher with the November contract on the New York Mercantile Exchange up four cents to US$91.89 a barrel.