USD/CAD drops below 1.03 after U.S. Decision

The Canadian dollar strengthened to a two-week high on speculation the Federal Reserve will maintain stimulus measures to counteract disruption in economic growth triggered by the U.S. government shutdown.

The currency approached its 200-day moving average against the greenback, a signal to some traders that there may be momentum for further gains. It advanced for a second day as President Barack Obama signed legislation that extended funding and debt-ceiling deadlines into 2014 and reopened the government, ending a 16-day standoff between Republican and Democratic lawmakers.

“There’s a base of a bullish channel that’s guided this whole move up,” Matthew Perrier, director of foreign exchange at Bank of Montreal, said by phone from Toronto. “If the Canadian dollar can continue on its path and close above the 200-day moving average, that would certainly set the stage for potential continuation of the Canadian rally and bring parity back into the market’s view.”


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