The Canadian dollar gained against its US peer today on speculations that the state of the economy does not warrant an early reduction of monetary stimulus. The currency also gained against the Great Britain pound and the euro.
Federal Reserve Bank of Richmond President Jeffrey Lacker said that he expects growth to stay “sluggish” for some time, reducing incentive for changing the current accommodative policy. Indeed, expansion of US gross domestic product was revised down to 1.8 percent in the first quarter of 2013 from the preliminary estimate of 2.4 percent. Central banks of Europe and England also signaled that they will likely keep monetary easing in the near future.
The Bank of Canada remains the only central bank among banks of developed nations with bias to raising interest rates, not cutting them. This increases the appeal of the Canadian currency to investors.
USD/CAD dropped from 1.0510 to 1.0463 as of 23:46 GMT today. EUR/CAD slid from 1.3744 to 1.3624 and GBP/CAD tumbled from 1.6212 to 1.6034.
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