The Canadian dollar posted its biggest drop in eight weeks after the U.S. Federal Reserve announced plans to begin trimming its monthly bond purchases starting in January amid signs of economic acceleration.
The currency fell for a third day versus its U.S. peer after the Fed cited “the cumulative progress toward maximum employment” in deciding to cut buying to $75 billion from $85 billion. Canada’s dollar dropped earlier against most of its major peers after Bank of Canada Governor Stephen Poloz told Bloomberg News yesterday that recent declines in the currency weren’t enough to help exporters.
“The U.S. dollar rose pretty much across the board against all currencies as a result of the move, which means that dollars will be less plentiful in the future, and rate hikes are one step closer,” Greg Anderson, head of global foreign-exchange strategy at Bank of Montreal, said by phone from New York. “I continue to see dollar/CAD headed to C$1.09 in three to six months.”
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