The Canadian dollar fell against its US counterpart on Thursday to a nearly 18-month low, as Bank of Canada Governor Stephen Poloz said the economy was weaker than forecast and predicted low oil prices would cut growth.
Poloz’s comments were likely to reinforce market expectations that the pace of future rate hikes will ease off.
At 9:17 a.m. (14:17 GMT), the Canadian dollar was trading down 0.4 percent against the greenback, at 1.3415 or 74.54 US cents. The currency hit its weakest level since June 12, 2017 at 1.3445 earlier in the session.
Poloz, speaking a day after the central bank kept interest rates on hold, repeated that more tightening would be needed to keep inflation on track but added the pace would be decidedly data-dependent.
Much of the bank’s discussion ahead of the interest rate announcement on Wednesday had been focused on oil, he said. Prices for crude, one of Canada’s main exports, are sinking amid a supply glut and this is hurting Alberta, the western province which is home to the domestic industry.
Oil prices tumbled about 3 percent in a volatile session on Thursday after OPEC signaled it may agree to a smaller output cut than expected and as concern over the economic impact of trade tensions hit global stock markets.
Canada’s trade deficit widened in October to C$1.17 billion ($0.87 billion), as both imports and exports dipped, Statistics Canada said on Thursday.
“The unexpectedly large widening of the trade deficit in October is a sign of things to come, with continued falls in energy prices in November set to cause export values to decline further,” Stephen Brown, senior Canada economist at Capital Economics, said in a note.