BLBG: Canadian Dollar Advances as Lowered ECB Rate Buoys Higher-Yielding Assets
Canada’s dollar rose against its U.S. counterpart after the European Central Bank unexpectedly cut interest rates, encouraging demand for higher-yielding assets.
“The Canadian dollar is following equities higher,” said Jerome Bernier, managing director of foreign exchange at National Bank Financial Inc. in Montreal. “This rate cut has taken everyone by surprise.”
Canada’s currency, known as the loonie for the image of the aquatic bird on the C$1 coin, climbed for a second straight day, appreciating 0.6 percent to C$1.0095 per U.S. dollar at 9:20 a.m. in Toronto. One Canadian dollar buys 99.06 U.S. cents. The loonie also gained 0.3 percent to C$1.3893 per euro.
The Stoxx Europe 600 Index climbed 2.4 percent, while Standard & Poor’s 500 Index futures expiring in December increased 1.2 percent.
The ECB reduced its benchmark interest rate to 1.25 percent from 1.50 percent as Italian and Spanish borrowing costs soared after euro-area leaders raised the prospect of Greece’s exiting the monetary union.
To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
