GB: Canadian dollar higher ahead of conclusion of U.S. Federal Reserve meeting
TORONTO - The Canadian dollar was higher as the American currency weakened ahead of the end of a two-day interest rate meeting of the U.S. Federal Reserve.
The loonie rose 0.1 of a cent to 99.36 cents US.
Markets have become increasingly convinced that the U.S. central bank is in no hurry to end its current stimulus programs amid a combination of low inflation and modest U.S. economic growth.
The Fed has said it plans to keep its key short-term interest rate near zero at least until the U.S. unemployment rate dips below 6.5 per cent from its current 7.6 per cent.
That could be a ways off as payroll firm ADP released employment data that indicated another month of weak job creation. ADP said private sector job creation came in at 119,000 during April, much lower than expectations of 150,000.
The report came out two days before the release of the U.S. government's employment report for last month.
The Fed has also been buying US$85 billion a month in Treasurys and mortgage bonds to try to keep long-term borrowing rates down. The goal has been to energize the economy through more consumer and corporate borrowing but it also involves printing money to buy those securities, which has had a depressive effect on the greenback.
Commodity prices were lower after data showed a slowdown in China’s manufacturing growth.
The China Federation of Logistics and Purchasing, an industry group, released data Wednesday showing that manufacturing grew at a slower pace in April and that export orders had been declining steadily. The federation’s purchasing managers’ index fell to 50.6 in April from 50.9 in March.
The June crude contract on the New York Mercantile Exchange lost $1.51 to US$91.95 a barrel.
June copper fell six cents to US$3.13 a pound and June gold bullion in New York dropped $6.30 to US$1,465.80 an ounce.
Traders also looked ahead to the European Central Bank's interest rate announcement on Thursday.
Market expectations have risen in recent days that the ECB will cut its key rate from its current record low of 0.75 per cent because of fears that the euro area’s economy isn’t recovering.
