Canadian dollar moves higher, Bank of Canada leaves interest rates unchanged

The Canadian dollar was higher Wednesday after the Bank of Canada said it was leaving its key rate unchanged at one per cent.

The loonie was up 0.28 of a cent to 96.48 cents US as the central bank also said that the one per cent level is “appropriate for a period of time.”

It added that “recent economic indicators suggest that growth in the first quarter was stronger than the Bank projected in April.”

That assessment came as the Organization for Economic Co-operation and Development said that the recession in Europe risks threatening the world’s economic recovery.

In its half-yearly update, the OECD again slashed its forecast for the 17 European Union countries that use the euro, saying it will shrink by 0.6 per cent this year, after a 0.5 per cent drop in 2012.

The U.S. economy will continue to outpace Europe, the OECD said, with growth of 1.9 per cent in 2013 and 2.8 per cent in 2014. It projects Canada’s growth will be slower than the United States, with a 1.4 per cent advance this year and 2.3 per cent next year.

Also, the International Monetary Fund trimmed its growth forecast for China this year from eight per cent to 7.75 per cent due to weaker global demand but said the Chinese economy should remain robust.

The IMF also warned that China needs to make a “decisive push” to launch new market-oriented reforms and has to control rapid credit growth that could lead to financial problems.

The glum economic outlooks depressed oil and copper prices with the June crude contract on the New York Mercantile Exchange down 18 cents to US$94.83 a barrel.

July copper slipped four cents to US$3.28 a pound while June gold gained $3.50 to US$1,382.40 an ounce.