The Canadian currency dropped to a two-month low versus the US dollar late Wednesday ahead of an official statement from the Bank of Canada that could address the economic misery of China while local figures showed rising exports.
Canada reported a smaller than estimated economic deficit of C$370 million in December as the exports rallied almost 10 percent, next to crude oil.
The country's strong export market could cushion worries at the central bank about a recent downturn in its local trade. Canada's robust export numbers follows strong data Friday that indicated a surprise rally in the country's commerce in November.
Bank of Canada Governor Stephen Poloz disclosed in January that the window was wide open to an interest rate reduction should the country's slowdown continue.
The Canadian loonie traded below 0.4 percent to the USD at 1.3292, or 75.23 US cents. The CAD, which dropped 1.9 percent last month, reached its lowest intraday mark at 1.3302 since December 3.
Due to reports of significant demand shocks coming from China, the loonie continues to drop alongside prices of crude oil, Simon Harvey, FX Market analyst for Monex Europe and Monex Canada, stated.
Price action in the USD/CAD currency pair thus far has marked a sharp contrast. The forex tandem wrapped up 2019 with a heavy selloff, dropping for the first time since October 2018 from an early-month peak of 1.3321 to check under the 1.3000 handle.
That price of 1,3000 brought in several support products for the period, helping to reverse bearish patterns in July and October before finally succumbing to selling pressure on last year's final trading day.
The loonie-greenback price action finds itself at an interesting spot on a longer-term basis. The gyration in the pair last year had a net bearish reading, provided that the high of 1.3664 in early January contributed to the low of 1.2952 set at the last day of 2019.
Yet nearly 50 percent of that shift has been eliminated in the early weeks of this year as a potent combination of both USD-strength and CAD-weakness has recovered prices in the mix.
According to Action Economics senior market planner Ryan Brecht, around the turn of the year, Canada's economy may have been on a "slightly better footing" than was feared.
Senior Deputy Governor Carolyn Wilkins of the Bank of Canada, considered by some investors as a prime candidate to replace Stephen Poloz when he steps down in June, was set to comment on finance and banking in a turtle paced growth environment on Thursday.
