The Canadian dollar increased to its strongest level in a month amid speculation the U.S. Federal Reserve won’t put an early end to its expansionary monetary policy, boosting riskier assets.
The loonie, as the currency is nicknamed for the image of the aquatic bird on the C$1 coin, rose the most in more than a week versus the greenback as the exit of former U.S. Treasury Secretary Lawrence Summers from the race to lead the Fed damped bets monetary easing will conclude sooner than expected. The Fed begins a two-day meeting tomorrow during which policy makers may decide to slow asset buying. Government-bond yields declined the most in a week.
“The foreign-exchange market today has been shaped by the announcement that Larry Summers withdrew his candidacy,” David Doyle, a Toronto-based strategist at Macquarie Capital Markets, said in a telephone interview. “That’s been broadly interpreted as signaling that U.S. monetary policy over the coming five years is likely to be less hawkish and more accommodative, which is causing Canadian dollar strength.”
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