The Canadian currency has lost 1.2 percent this year versus nine developed-nation peers tracked by Bloomberg Correlation- Weighted Indexes as the nation’s 25-year commodity-fueled expansion shows signs of faltering. The worst for the currency may already be priced in, Anderson said.
“The market has gotten too bearish on the Canadian dollar here going into this meeting and may get surprised the other way as there’s no change in the statement,” Anderson said. Traders will seek to unwind trades where they are running short positions versus other paired trades, triggering a gain in the loonie following tomorrow’s rate announcement, he said.
Hedge funds and other large speculators had 21,433 more bets the Canadian dollar would fall than bets it would gain, so- called net shorts, on Feb. 26, compared with 19,379 more bets it would gain, or net-longs, a week earlier, the CFTC data show.
Oil Sands
Policy makers pared their forecast for economic growth Jan. 23 when they released their last policy report to 2 percent this year from an October prediction of 2.3 percent. Economists surveyed by Bloomberg predict Canada’s economy will expand 1.75 percent in 2013, compared with growth of 1.8 percent in the U.S. and an average 1.12 percent in the Group of 10 economies.
Alberta oil remains trapped by bottlenecked pipelines, limiting an engine of growth that contributes about 15 percent of gross domestic product, the central bank said in January. The economy expanded at an annualized pace of 0.6 percent in the fourth quarter, Statistics Canada said March 1.
The differential for Western Canada Select to U.S. West Texas Intermediate was $27 yesterday. The discount reached a record $42.50 a barrel on Dec. 14.
“Traders are finding it easy to sell the Canadian dollar on any negative news or any geopolitical hiccup,” Adam Button, a currency analyst at Forexlive.com, said by phone from Montreal. “And when there is good news, the Canadian dollar rallies are minimal.”