Canada’s dollar dropped to an almost one-year low versus its U.S. peer after Federal Reserve Chairman Ben S. Bernanke said monthly bond purchases may be reduced if the economy shows sustained growth.
The currency declined earlier after Canadian retail sales stagnated in March, boosting bets the Bank of Canada will reverse its bias to raise interest rates. It remained lower as the minutes of the Fed’s last meeting showed a number of officials were willing to taper bond buying as early as the next meeting on evidence of sustained growth. The so-called loonie fell against the majority of its 16 most-traded peers as oil, the nation’s largest export, dropped for a second day.
“You’re seeing a bit of a selloff after Bernanke made that clarifying comment that, if things do look a little bit better, there’s the potential for tapering,” Emanuella Enenajor, an economist at CIBC World Markets, said by phone from Toronto. “It hit commodities, it hit risk-correlated currencies, as well. So you saw the Aussie take a hit, you saw the U.S. dollar see a little support and, of course, you saw the Canadian dollar lose a little support.”