The Canadian dollar rose (FOREX:CADUSD) with the currencies of fellow commodity exporters Australia and New Zealand amid bets raw-material prices have reached a bottom.
The currency was poised for a weekly advance against the greenback after posting its biggest annual decline in five years in 2013 amid signs growth is trailing that of the U.S. A tepid recovery has prompted the Bank of Canada to warn of deflationary risks and abandon leanings toward higher rates, even as the Federal Reserve begins to withdraw monetary stimulus. Fed Chairman Ben S. Bernanke will address the American Economic Association in Philadelphia later.
“The move in the Canadian dollar is largely in line with commodity currencies this morning,” Greg T. Moore, a currency strategist at Toronto-Dominion Bank, said by phone from Toronto. “Bernanke’s comments could end up being the defining event of the week as the market tries to assess how much more the Fed is going to be tapering.”
The loonie, as Canada’s currency is known for the image of the aquatic bird on the C$1 coin, gained 0.5% to C$1.0617 per U.S. dollar at 8:59 a.m in Toronto. One loonie purchases 94.19 U.S. cents. The currency dropped 6.6% in 2013, the biggest loss against the greenback since 2008.
The Australian dollar climbed 1% to 89.99 U.S., the biggest advance since Oct. 1. The Aussie dropped 14% versus the greenback last year, third worst of 16 major currencies. New Zealand’s dollar added 1.4% today.
Bank of Canada Governor Stephen Poloz has said stronger growth will depend on increased exports as domestic consumer spending slows down. Crude oil, Canada’s largest export, yesterday sank to the lowest level in a month.
The Fed said on Dec. 18 it will cut its stimulus program of monthly bond purchases, known as quantitative easing, to $75 billion from $85 billion starting this month. Policy makers will pare purchases by $10 billion in each of its next meetings before ending the program late this year, the median forecast of analysts surveyed by Bloomberg on Dec. 19 indicates.