By: Barbara Zigah
In early morning trading in New York, the Canadian Dollar rose versus the U.S. Dollar in advance of the Canadian central bank’s interest rate announcement scheduled for later today. Analysts expect that the Bank of Canada will leave the current rate unchanged at 1%, in the hope that the stalled economy will better recover.
Since the summer, the central bank has raised their benchmark rate three times, but a lackluster manufacturing sector pinned down by a too strong Canadian Dollar is having a detrimental effect on their export trade with goods too expensive for their primary trading partner, the U.S. market. As reported at 8:56 a.m. (EST), the Canadian Dollar was trading against the greenback at .9974, up .30%.
General softness in the U.S. Dollar is also being attributed to the U.S. President’s controversial tax cuts; President Obama extended Bush administration tax cuts to the wealthiest Americans at the urging of the Republican legislatures.
In exchange, the Republican lawmakers will approve extensions or amendments to certain social programs, specifically extending unemployment benefits and reducing payroll taxes. The U.S. Dollar Index, which measures the greenback’s strength versus a weighted basket of currencies, slipped to 79.418 .DXY, a decline of .2%.