Canada’s dollar fell after data showed the economy of the U.S., the nation’s biggest trade partner, grew more than forecast, bolstering bets the Federal Reserve will slow monetary stimulus sooner than predicted.
The currency erased earlier gains after the European Central Bank unexpectedly cut interest rates to a record low to head off the threat of deflation. Losses were tempered before a report tomorrow forecast to show Canada added jobs in October for a third straight month. The U.S. dollar gained versus most major peers after America’s gross domestic product expanded at the fastest pace in a year. Commodities and stocks fell.
“Every time there’s good news, the market thinks, ’Oh no, there’s not going to be as much cheap money,’” Jane Foley, senior currency strategist at Rabobank International, said by phone from London. “The market associates the loonie with commodity prices, and cheap money underpins speculative demand, risk appetite. Better demand for commodities is associated with that, and the Canadian dollar can be associated with that.”
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