The Canadian dollar weakened as the International Monetary Fund cut its growth forecast for Canada, making the growth-related nation’s currency less attractive for investors.

The IMF revised its growth estimate to 2.1 percent from the June forecast of 2.9 percent. The outlook worsened because of the slower global economic growth and the faltering economic recovery of Canada’s major trading partner — the United States of America. The downgrade of Italy’s credit rating by Standard and Poor’s also had its negative impact.

Bank of Canada Governor Mark Carney was also concerned about the economy of the US, as he admitted in his speech:

The United States is in the midst of the weakest recovery since the Great Depression, and the bank does not expect that to change at any time soon.

He also spoke about the possibility of higher interest rates:

Given current material headwinds, the policy rate can return to its long-run level after inflation is projected to reach the 2 percent target and output is projected to reach its potential.

USD/CAD traded at 0.9925 today as of 00:19 GMT after rising yesterday from 0.9904 to 0.9924. EUR/CAD traded near 1.3610, following yesterday’s advance from 1.3556 to 1.3595. CAD/JPY traded at about 76.94 after it fell on the previous trading session from 77.26 to 76.97.

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