The Canadian dollar traded within a cent from parity with the US currency as decline of stocks and signs of global economic slowdown spurred speculation that the nation’s central bank will decrease its interest rates.The Bank of Canada will announce its decision about borrowing costs tomorrow. Investors’ viewpoints are split about evenly among those who believe that the bank will keep the key Overnight Rate unchanged at 1 percent and those who think that the current unfavorable economic conditions will force the bank to cut its target lending rate.
The Standard & Poor’s 500 Index slumped as much as 2.2 percent. Market pessimism was tempered by the good new from the US, Canada’s biggest trading partner. The Services Purchasing Managers’ Index of Institute for Supply Management advanced from 52.7 to 53.3 in August, compared to the median forecast of 51.2.
USD/CAD traded near 0.9910 as of 15:31 GMT today after jumping from 0.9904 to 0.9963. EUR/CAD climbed from 1.3960 to as high as 1.4100 before retreating to 1.3871. CAD/JPY rose from 77.50 to 78.05.
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