Canadian dollar moves tightly before Bank of Canada rate decision

TORONTO - The Canadian dollar was slightly higher early Wednesday ahead of the Bank of Canada's decision on its key interest rate.

The loonie moved up 0.08 of a cent to 91.22 cents U.S. before stock markets opened, and ahead of the central bank announcement at 10 a.m.

The Bank of Canada isn't expected to hike rates or alter the course of its neutral stance about future changes.

However, the language Governor Stephen Poloz uses will be closely scrutinized for insight into how the bank views weak inflation figures, which have stayed below a target of two per cent.

"Governor Poloz has studiously avoided detailed discussions about Canadian dollar valuations, referring to the currency as a market-determined price," said Mark Chandler, head of Canadian FIC Strategy at RBC Dominion Securities in a note.

"However, movements in the Canadian dollar do feed through into growth and inflation and must be explicitly considered."

In commodities, the February gold bullion contract slipped $1.40 to US$1,240.40 an ounce.

The February crude oil contract on the New York Mercantile Exchange gained 54 cents to US$95.51 a barrel.