Loonie makes hard landing, sterling defensive before BOE rate review

Wed Jan 13, 2016 6:22pm EST
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By Ian Chua

SYDNEY (Reuters) - The Canadian dollar wallowed at a 12-year trough early on Thursday following another slide in oil prices, while sterling was pinned near a 5-1/2 year low ahead of the Bank of England's first policy review of the year.

Sentiment also soured for the greenback, which retreated from a one-week high against a basket of major currencies as U.S. stocks .SPX sank to fresh three-month lows.

The dollar index .DXY last stood at 98.901, having been as high as 99.333. Against the yen, the greenback bought 117.63 JPY=, down from 118.38. The euro rebounded to $1.0882 EUR=, from $1.0805.

Not helping dollar bulls, two top Federal Reserve officials expressed concerns about slowing Chinese growth.

Boston Fed President Eric Rosengren said global and U.S. economic growth may be slipping and could force the Fed into a more gradual course of rate hikes than officials currently expect.

Canada's loonie was the standout currency, falling as far as C$1.4380 per USD CAD=D4, a low not seen since early 2003. It has since edged back to C$1.4346.

Investors took aim at the Canadian dollar as Brent crude dipped below $30 a barrel for the first time since April 2004, fuelling speculation the Bank of Canada could cut interest rates as early as next week.

While currencies of most oil exporters have had a torrid time, the Norwegian crown NOK= has managed to bounce off its lows in the past week. The dollar last bought 8.8188 crowns NOK= versus 8.9913 a week ago.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.   REUTERS/Mark Blinch