Loonie rises as traders await Ottawa budget

The Canadian dollar advanced Tuesday morning while traders looked ahead to the release of the federal government’s new budget.

The loonie was ahead 0.14 of a cent to 90.6 cents US as the U.S. dollar backed off amid the other major market event of the day – congressional testimony by the new chair of the Federal Reserve.

Finance minister Jim Flaherty tables his new budget at 4 p.m. EST with surprises expected to be minimal...

Meanwhile, Fed chairwoman Janet Yellen said that she expects a “great deal of continuity” with her predecessor, Ben Bernanke.

Yellen signalled that she supports his view that the economy is strengthening enough to withstand a pullback in stimulus but that rates should stay low to fuel further growth...

Traders are also braced for what could be some further negative news from China after data last week showed the manufacturing sector in the world’s second-biggest economy still expanding but at a slower pace.

Meagre trade growth is expected when import and export data is released Wednesday. Inflation data comes out the next day and Barclays Research said it expects inflation to moderate to 2.3 per cent year over year in January from 2.5 per cent in December, thanks in large part to lower food inflation...

This has been excerpted from the 11 February 2014 article by the Globe and Mail, and is available in its entirety at http://www.theglobeandmail.com/report-on-business/economy/currencies/loonie-rises-as-traders-await-ottawa-budget/article16796008/ (subscription may be required).