The ‘Loonie’ continued to dip against its US rival as crude oil, a key Canadian commodity, declined amid mounting speculation regarding the possible outcome of Federal Reserve Chairman Ben Bernanke’s fiscal policy announcement.
The Canadian Dollar Exchange Rate was in the region of 0.9733 against the US Dollar as of 14:25 GMT
Some economists are expecting Bernanke to intimate that the US will begin paring back its current quantitative easing programme in the next few months, but others feel that the central bank will hold off from making any alterations at the present time, despite a recent run of optimistic US data.
Over the last few weeks several members of the Federal Open Market Committee have expressed conflicting views on how they think economic policy should proceed.
For example, although Eric Rosengren has argued that the US economy is not yet stable enough for the Fed to taper its asset purchases, John Williams has expressed the view that easing should be slowed by the end of this year.
According to one currency analyst with Societe Generale, ‘the Fed is slowly moving out of the ultra-dovish camp, as the Bernanke clan reassesses the risks for the Fed balance sheet and the economy of ultra-easy conditions for so long.’
As Bernanke’s testimony will have a significant impact on the tone of markets, notably US treasuries, the US Dollar and equities, speculation regarding what stance he will adopt has caused fluctuations in the ‘Greenback’ exchange rate over the past couple of days.
In response to the Canadian Dollar sliding to 97.30 US cents, forex expert Jack Spitz asserted that the commodity-driven currency is ‘really following the flow, which sees the US Dollar stronger across the board [in reaction to] the anticipation that quantitative easing tapering is on the cards.’
If the Fed hints at QE being reduced the US Dollar is likely to turn bullish and advance on its peers.
The ‘Loonie’ is also under pressure as industry experts weigh the odds of the Bank of Canada’s interest rate cuts being reversed by incoming Governor Stephen Poloz.
Domestic retail sales figures will also be of interest to the Canadian Dollar in the days ahead. Economists are forecasting a 0.2 per cent month-on-month gain to follow February’s 0.8 per cent advance.
The Canadian Dollar was able to advance on the British Pound today as the latter currency broadly softened in response to UK consumer-price inflation falling by more than expected.
Current Canadian Dollar (CAD) Exchange Rates:
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The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9733 <
The Canadian Dollar /Euro Exchange Rate is currently in the region of: 0.7564 <
The Canadian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6425 >
The Canadian Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.9952 <
The Canadian Dollar /New Zealand Dollar Exchange Rate is currently in the region of: 1.1951 <
The Pound Sterling/Canadian Dollar Exchange Rate is currently in the region of: 1.5568 <
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0278 >
The Euro/Canadian Dollar Exchange Rate is currently in the region of: 1.3207 >
The New Zealand Dollar/Canadian Dollar Exchange Rate is currently in the region of: 0.8359 <
The Australian Dollar/Canadian Dollar Exchange Rate is currently in the region of: 1.0048 >
(Correct as of 14:25 GMT)
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