Canada’s dollar fell to a more than two-month low against its U.S. counterpart amid speculation growth in the world’s largest economy would spur the Federal Reserve to reduce stimulus, known as quantitative easing.
The currency declined against the majority of its 16 most-traded peers as crude oil, Canada’s biggest export, snapped a four-day rally. It pared losses versus the greenback after one Fed regional bank president said the central bank should continue its bond-buying program while another said he was undecided on the Fed’s next move. Fed Chairman Ben S. Bernanke will discuss policy in congressional testimony tomorrow before the central bank releases minutes of its last meeting.
“The market seems to be preparing for some discussion about the end of QE, which will give the dollar more strength and should weigh on the Canadian dollar,” David Watt, chief economist at the Canadian unit of HSBC Holdings Plc, said by phone from Toronto. “The Canadian economy is still struggling. Inflation numbers have suggested that there is no reason for the Bank of Canada to consider hiking rates.”
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