* Canadian dollar slides as dovish BOC calls for lower
* Soft China's manufacturing sector report hits Aussie's
* Pound jumps as falling unemployment brings rate hike
* Euro, yen in familiar ranges vs dollar
By Ian Chua and Hideyuki Sano
SYDNEY/TOKYO, Jan 23 The Canadian dollar slid to
4 1/2-year lows on Thursday after the Bank of Canada said the
currency's depreciation should help exports, while the
Australian dollar weakened following a disappointing survey of
In contrast, sterling took off after a surprisingly big fall
in the UK jobless rate prompted investors to price in an earlier
start to rate hikes in Britain.
The loonie, as the Canadian dollar is known, fell to
C$1.1139 per U.S. dollar, bringing its decline this
year to nearly 5 percent and trading at its lowest level since
The pound gained even more, jumping to its highest since
mid-2009 at C$1.8450. Sterling was on a tear after
data showed a UK unemployment fell to 7.1 percent, just a
fraction above the 7 percent threshold level for the Bank of
England to start considering raising rates.
In contrast, the Bank of Canada took a leaf out of the
Reserve Bank of Australia's (RBA) play book and tried to talk
down the loonie, saying in its Monetary Policy Report that a
still strong currency posed an obstacle to exports.
Although the central bank stopped short of saying its next
move is likely to be a rate cut, it also said it had become more
concerned about weak inflation.
"It seems as though Governor Stephen Poloz may revert back
to the BOC's easing cycle as the persistent slack in the real
economy continues to drag on price growth," said David Song,
analyst at DailyFX.
"At the same time, the BOC made it increasingly clear that a
further depreciation in the Canadian dollar should further
assist with the rebalancing of the real economy."
That echoes the RBA which spent much of last year
complaining about the strength of the Australian dollar. Its
efforts played a part in a 14-percent slide in the currency in
Although the Aussie appeared to have found a good support
below 88 U.S. cents after surprisingly robust inflation at home
on Wednesday, it took a fresh beating by following a survey
which suggested demand for Australian exports from China could
The Aussie dropped 0.6 percent to $0.8789, near 3
1/2-year low of $0.8756 hit on Monday, as the flash reading of
Markit/HSBC Purchasing Managers' Index (PMI) for China fell to
49.6 in January from December's final reading of 50.5.
Other major currencies were trapped in familiar ranges
overnight amid a lack of fresh impetus in the lead up to the
Fed's Jan. 28-29 policy meeting.
There is talk the U.S. central bank will further reduce its
bond-buying programme as the world's biggest economy continued
Such an outcome should provide a floor for the U.S. dollar,
which firmed slightly against a basket of major currencies
to be near a two-month peak set on Tuesday.
The euro eased to $1.3547, not far from a two-month
trough of $1.3508 plumbed on Monday. Against the yen, the common
currency was little changed at 141.63, while the
dollar edged up to 104.55.
On Wednesday, the Bank of Japan dismissed the need for
additional monetary easing, dampening expectations for more
stimulus to offset the impact of a sales tax rise in April.
"Judging from BOJ Governor Kuroda's comments yesterday,
another easing is almost unthinkable, at least this quarter,"
said Ayako Sera, senior market economist at Sumitomo Mitsui
Trust Bank in Tokyo.
"Without additional factors, the dollar is unlikely to rise
far beyond 105 yen," she added.