USD/CAD to 1.03 as Speculation Increases over U.S. Fed Tapering

Canada’s dollar gained the most this week as speculation the Federal Reserve will begin slowing stimulus as soon as September weighed on demand for assets denominated in the U.S. currency.

The Canadian dollar strengthened as crude oil, the nation’s biggest export, advanced for a fifth day, the longest winning stretch since April. U.S. stocks and Treasuries dropped, while gold, which Canada produces, rallied. Claims for jobless benefits in the U.S. unexpectedly dropped and the cost of living rose, bolstering bets the Fed will soon slow its bond buying.

“All the U.S. assets are down — stocks are down, bonds are down, the dollar is down,” Marc Chandler, the global head of currency strategy at Brown Brothers Harriman & Co., said by telephone from New York. “If I’m right, we’re in a weak U.S.- dollar environment for a little bit. That means the Canadian dollar is going to strengthen; maybe there’s scope for another percent or so.”


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