Canadian Dollar Slumps To Fresh Multi-year Low Against Aussie [AUD/CAD]
4/23/2008 6:57:09 AM The Canadian dollar weakened to a fresh multi-year low against the aussie in early European deals on Wednesday. On the other hand, against the other major currencies, the loonie dropped in Asian trading but bounced back in European deals.
The loonie that closed yesterday`s trading at 0.9527 against the aussie slipped to 0.9627 by about 4:20 am ET Wednesday. This set a new multi-year low for the former.
The Aussie surged today as Australia`s annual inflation accelerated above 4% in the first quarter of 2008. The annual rate of inflation soared above 4% for the first time in almost seven years, increasing the risk of another interest rate hike in the coming months.
The Reserve Bank of Australia`s underlying measures of inflation also jumped above 4%, well above the central bank`s 2 to 3% target. The central bank had already predicted a CPI rate of about 4%, but had expected underlying inflation to be just below this level.
The Australian Bureau of Statistics said today that the consumer price index rose 1.3% from the previous quarter and increased 4.2% from a year earlier, beating market forecast of 1.1% and 4.0% growth, respectively. Surging commodity and food prices and rising wages pushed annual inflation above central bank`s target.
The loonie is now worth 1.0063 against the greenback and 1.6060 versus the euro, strengthened from early lows of 1.0102 and 1.6133, respectively. The greenback-loonie pair was worth 1.0083 at Tuesday`s close and the euro-loonie pair was worth 1.6129.
France`s consumer spending of manufactured goods declined 1.7% month-on-month in March, faster than 0.3% fall expected, the statistical office INSEE said today. On an annual basis, consumer spending grew 1.2%, slower than 2.8% predicted.
Euro zone industrial new orders grew 0.6% month-on-month in February, the Eurostat announced today. Economists had expected a decline of 0.4%. On a yearly basis, new orders grew at a faster pace of 9.9% compared with a revised 7.1% growth in January. New orders increased more than 5.7% expected by analysts.
Additionally, Italian retail sales climbed 2.7% year-on-year in February, faster than 0.6% growth expected. Compared to the same month of the previous year, Italian retail sales climbed 0.3%, while economists expected 0.0% growth.
Against the yen, the loonie touched a low of 101.97 by about 2:55 am ET Wednesday. The pair then reversed its direction and hit 102.57 within three hours. The pair closed yesterday`s trading at 102.22.
The Ministry of Finance said today that Japan`s merchandise trade surplus decreased by 30.2% on year to 1.119 trillion yen in March. Market had expected a 15.3% drop in trade surplus.
Citing concerns about the impact of a slowdown in the U.S. economy, the Bank of Canada announced yesterday that it decided to lower its benchmark interest rate by half a percentage point to 3%. The interest rate cut was widely anticipated by analysts. This marked the bank`s second consecutive 50 basis point rate cut.
In its accompanying statement, the bank said that global economic growth has weakened due to the sharp slowdown in the U.S. economy and ongoing dislocations in global financial markets. Additionally, the Bank of Canada said that it now expects a deeper and more protracted slowdown in the U.S. economy, which it said has direct consequences for the Canadian economic outlook. The bank subsequently said it expects the Canadian economy will grow by 1.4 percent in 2008 before accelerating to 2.4 percent in 2009 and 3.3 percent in 2010.
Investors now look forward to the Canadian retail sales report for February, which has been scheduled for release at 8:30 am ET. Economists expect retail sales to rise 0.1% in February following January`s rise of 1.5%.