Bloomberg News

Canadian Dollar Touches 10-Week High as U.S. Maintains Stimulus

May 01, 2013

The Canadian dollar touched a 10-week high as the U.S. Federal Reserve maintained its asset-purchase program to nurse an economic recovery in the nation’s biggest trading partner.

The currency weakened from the high for the day against its U.S. counterpart as a decline in oil pointed to signs of economic slowdown in the U.S. and China. The Bank of Canada sold C$2.9 billion ($2.88 billion) of 10-year bonds at an average yield of 1.676 percent.

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, rose 0.1 percent to C$1.0064 per U.S. dollar at 2:18 p.m. in Toronto. One loonie buys 99.36 U.S. cents. The currency earlier reached C$1.0052, the highest level since Feb. 15.

The U.S. central bank said it will maintain bond buying of $85 billion a month, divided between $40 billion a month of mortgage-backed securities and $45 billion a month of Treasury securities. The Fed repeated that bond buying will continue “until the outlook for the labor market has improved substantially.”

The Fed also left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and the outlook for inflation doesn’t exceed 2.5 percent.

To contact the reporter on this story: Cecile Gutscher in London at cgutscher@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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