Canadian dollar dips ahead of Bank of Canada interest rate announcement

TORONTO – The Canadian dollar was slightly lower Tuesday as oil and copper prices advanced and traders looked ahead to the Bank of Canada’s next interest rate announcement on Wednesday.

The loonie dipped 0.05 of a cent to 96.69 cents US. The central bank is widely expected to keep its key rate unchanged for some time to come. Traders will look to the bank’s statement for indications on how the economy is expected to perform.

On Friday, markets will get Statistics Canada’s reading on how the economy performed during the first quarter. The agency is expected to announce that gross domestic product rose by 0.1 per cent during March, adding up to an annualized rise of 2.2 per cent for the quarter.

Oil and copper prices advanced after being buffeted last week after a survey by HSBC Corp. showed a decline in China’s manufacturing for May. An official report on factory production in the world’s second-largest economy will be released later in the week. The July crude contract on the New York Mercantile Exchange was up 90 cents to US$95.05 a barrel.

July copper was one cent higher to US$3.31 a pound. Bullion prices slipped with the June contract in New York down $9.60 to US$1,377 an ounce.

Traders also looked ahead to key U.S. consumer and housing data coming out during the morning.

The New York-based Conference Board’s consumer confidence index is expected to come in at 72.3 for May, up from a prior reading of 68.1.

The data will be scrutinized for how it might influence the Fed, which is undertaking its third round of aggressive bond-buying to help the economy. Speculation that the U.S. central bank might scale back the program based on a recent improvement in some economic indicators has sparked jitters in stock markets and pushed the greenback higher.

Traders will also take in what is expected to be further good news from the American housing sector. The S&P/Case-Shiller home price index for March is expected to show a 0.9 per cent rise, which would translate to a 10 per cent year over year gain — the first double-digit increase in over six years.