BLBG: Canadian Dollar Falls Second Day as Poloz Says Rates Steady
The Canadian dollar fell for a second day after Bank of Canada Governor Stephen Poloz said interest rates would not change for “quite some time” as speculation built the Federal Reserve will slow stimulus.
The currency weakened as the interest rate advantage of Canada’s two-year bonds compared to U.S. counterparts dropped to 77 basis points, the narrowest spread since Sept. 4, limiting the relative appeal of the Canadian dollar denominated securities. U.S. policy makers meet on Dec. 17-18 amid speculation the Federal Open Market Committee will slow bond purchases used to keep borrowing rates low.
“We’ve seen some gradual erosion in short-term yields between Canada and the U.S. which may add some more short-term pressure on the Canadian dollar,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank, by phone from Toronto. “From a broader point of view it’s probably about the FOMC and the tapering bet that’s supporting the dollar.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, fell 0.1 percent to C$1.06647 per U.S. dollar at 8:22 a.m. in Toronto. One loonie buys 93.92 U.S. cents.
