The Canadian dollar halted a three-day slide on speculation the currency had declined too far too fast as investors bet the Federal Reserve will maintain monetary stimulus that may devalue the U.S. dollar.
The currency fell the most last week since June after the Bank of Canada dropped a bias toward higher interest rates it had included in every policy statement for more than a year, even as it held the benchmark rate at 1 percent. The Fed, which starts a two-day policy meeting tomorrow, is unlikely to begin tapering the bond-buying program its used to lower interest rates and stimulate the economy, according to the median estimate of a Bloomberg economist survey.
“After that pretty harsh selloff we saw last week after the Bank of Canada rate announcement, I think what’s happening now is we’re just seeing a consolidative pattern here where traders are assessing the message the Bank of Canada put forward,” said Scott Smith, senior market analyst at Cambridge Mercantile Group, a global foreign exchange and payments provider, by phone from Calgary.
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