The Canadian dollar fell yesterday and retained losses today, reaching the lowest level in more than a month against its US counterpart, as signs of stimulus tampering by the Federal Reserve resulted in decline of commodities, which in turn led to drop of commodity currencies. The currency managed to bounce versus the Japanese yen.
The minutes of the Federal Reserve policy meeting were the major event this week and traders were waiting for the impatiently. Most currencies related to growth slumped after the minutes were released. At the same time, the US Dollar Index reached the highest level in a week.
The Fed did not set specific date for reduction of monetary stimulus, but most economists are fairly certain that it will happen in September. Macroeconomic data supported the case for smaller stimulus as existing home sales demonstrated strong growth in July.
USD/CAD rallied from 1.0467 to 1.0496 (the highest rate since July 10) as of 2:29 GMT today. EUR/CAD advanced from 1.3981 to 1.3995, trading near the highest price since November 2011. Meanwhile, CAD/JPY fell from 93.55 to 93.19 yesterday, but rebounded to 93.51 today.
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