Canadian dollar trades tightly a day before BoC gov Poloz’s rate decision

TORONTO – The Canadian dollar moved slightly higher on Tuesday as traders held tight a day before the Bank of Canada’s rate decision.

The loonie was up 0.05 of a cent to 96.07 cents US shortly before stock markets opened.

Most of the attention is likely to stay on anticipation of the central bank’s first policy decision with new governor Stephen Poloz at the helm, scheduled for Wednesday.

“Interest rates are widely expected to remain on hold at one per cent, leaving the debate centre on whether Governor Poloz will shift to a neutral stance or retain the slight hawkish bias,” Scotia Capital chief currency strategist Camilla Sutton said in a note.

“We have been given few clues, however are biased to believe that the BoC chooses to maintain it, this would support the Canadian dollar.”

Also expected Wednesday is testimony from U.S. Federal Reserve chairman Ben Bernanke about the U.S. economy.

In commodities, August bullion rose $5.80 to US$1,289.30 an ounce.

Oil is also up with the August contract on the Nymex ahead 64 cents to US$106.96 a barrel.