USD/CAD near 1.07 on Rate-Cut Wagers

Canada’s dollar fell to the lowest in three years as central-bank Governor Stephen Poloz warned of low inflation, spurring bets the Bank of Canada will keep interest rates on hold as the Federal Reserve trims bond-buying.

The currency touched C$1.07 as it declined for a fourth day against its U.S. peer after a private report showed American companies boosted payrolls more than forecast in November. The data added to wagers the Federal Reserve will cut asset purchases as soon as this month, even as Poloz in Ottawa said in a statement “the substantial monetary policy stimulus currently in place remains appropriate” as he kept interest rates unchanged.

“The combination of both central banks and the data today is certainly something that would drive a weaker Canadian dollar,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “If we have a Fed that begins to taper earlier than what’s priced in — because, right now with the bond-buying program, it’s U.S. dollar negative — so if we have that pulled in, it turns increasingly U.S.-dollar positive.”

Bloomberg

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