The Canadian dollar rallied against its US counterpart yesterday and remained strong today on prospects for prolonged monetary stimulus from the Federal Reserve. The currency also rose against the Japanese yen, but was flat against the euro.
Janet Yellen, who is nominated to be the next chairman of the Federal Reserve, suggested that stimulus should not be reduced until there are more evidences of improvements in the economy and the labor market. She said:
A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.
Such comments were negative for the US dollar and, as a result, positive for other currencies, damping risk aversion on the Forex market. As for news from Canada, the trade balance report and the Bank of Canada Review will be released today.
USD/CAD was at about 1.0461 as of 2:36 GMT today after sinking from 1.0493 to 1.0454 yesterday. EUR/CAD traded near the opening level of 1.4097. CAD/JPY edged up from 94.86 to 95.02.
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