FOREX-Oil price slide sends Canadian dollar to lowest since 2003

Thu Jan 14, 2016 4:33am EST
 
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* Canadian dollar on defensive as oil prices fall further

* Euro gains on Reuters report ECB wary of more action

* Sterling awaits BOE's first policy review of 2016

By Jemima Kelly

LONDON, Jan 14 (Reuters) - Oil-rich Canada's dollar fell to its lowest level since April 2003 on Thursday as crude prices slid to their weakest in 12 years, fuelling speculation the Bank of Canada could cut interest rates as early as next week.

Ahead of the Bank of England's latest monetary policy meeting and interest rate decision, sterling hit an 11-month low against the euro of 75.77 pence.

The euro was up across the board on a Reuters report that European Central Bank policy makers are sceptical about the need for further policy action in the near term.

The loonie - traders' name for the Canadian dollar - fell to C$1.4389 against its U.S. counterpart as benchmark brent crude hit a new 12-year low. Canadian heavy crude also collapsed to around $15 a barrel this week, the lowest level since the benchmark was introduced in 2004.

"Negative oil price momentum is negative for Canada generally, given that it's a major oil exporter, and also it seems to have become the case that BOC rate expectations are also linked directly to the oil price," said RBC Capital Markets currency strategist Adam Cole.   Continued...