The Canadian dollar pared losses after the Bank of England and European Central Bank assured investors interest rates would remain low, bolstering the allure of riskier assets.
The currency fell earlier before a report tomorrow that will show Canada lost 7,500 jobs in June after adding 95,000 positions the month before, according to a Bloomberg survey of 20 economists. A U.S. report is expected to show job gains. The Federal Reserve has tied the reduction of its monetary stimulus program to improvements in the job market even as the world’s other central banks have said slow growth warrants more action.
“There is now more optimism because two important central banks are committed to very accommodative monetary policy, and that should help with risk appetite,” said Jane Foley, senior currency strategist at Rabobank International, by phone from London. “If you have the ECB, the Bank of Japan, the Bank of England all maintaining very accommodative monetary policy, then even if the Fed begins to taper investors should be assured there’s still a huge amount of liquidity out there.”