Loonie lower ahead of vote expected to trigger fall of Conservative government

TORONTO – The Canadian dollar was slightly lower against the greenback Friday ahead of the expected fall of the Conservative government later in the day. The loonie shed early gains and moved down 0.07 of a cent to 102.37 cents US.

“We should see lots of fireworks in Ottawa as the Liberal party introduces its non-confidence motion that is expected to bring down the government,” observed a commentary from RBC Capital Markets.

Traders don’t expect an election to have an effect on the loonie.

For one thing, the next scheduled announcement on interest rates from the Bank of Canada is April 12th and the central bank wasn’t expected to move on raising rates from one per cent. And the election will likely be settled by the time of the next announcement May 31st.

“Election wrangling will not factor into the BoC’s decision-making process, but recent events have given the central bank more leeway in deciding when to kick off a hiking campaign,” said RBC Capital Markets.

“The Bank of Canada’s September 7th meeting is the first one to fully price in a 25 basis point rate hike, though we believe it could and should come earlier.”

The loonie has found lift lately from higher oil prices, which are up about 25 per cent since mid-February when a revolt against Libyan leader Moammar Gadhafi gained momentum. On Friday, the May crude contract on the New York Mercantile Exchange was off two cents at US$105.58 a barrel.

Bullion prices eased with the April gold contract on the Nymex off $1.50 to US$1,433.40 an ounce.

The May copper contract in New York was unchanged at US$4.42 a pound.

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