Canadian Dollar Advances on Fed Officials’ Comments

By TraderVox.com

Tradervox.com (Dublin) – The week started with Fed Chairman raising concerns about the economy saying that the accommodative monetary policy is necessary for the recovery process. These comments have been followed by similar comments by different Fed officials including the Federal Reserve Vice Chairwoman who Janet Yellen who said that the interest rates should remain low to support economic recovery. These comments have also been supported by New York Fed President William Dudley and the Atlanta Fed President Dennis Lockhart saying the accommodative monetary policy is necessary. These comments are some of the factors that have resulted to the loonie’s advance against the greenback.

The disappointing NFP data and the recent weekly jobless claim data have also added to the weakening of the dollar raising the prospects of the Canadian dollar. Further, investors are optimistic about the prospects of the Canadian economy expecting the BOC to review its outlook upwards in the coming meeting. According to Michael Woolfolk  from New York Mellon Corp in New York, the larger than expected jobless claims figures will remind people of the NFP data, which will lead to a decreasing US dollar and concerns about the trend of the US economy.

The current speeches by Fed officials have been construed as a way of reminding the market what the Federal Reserve is doing to enhance the economic recovery. The recent series of negative reports from the US has solicited fears that the US economy may be changing its trend and concerns have returned of another round of quantitative easing if the trend changes. In the recent FOMC minutes, Fed official indicated that they would change their stance on monetary policy if something drastic happened. Traders and investors are checking the trend and the reports to see whether this is a drastic change in the economic trend.

These series of events and reports have led to an increase of the Canadian dollar by 0.5 percent against the US dollar to trade at 99.86 cents per dollar.

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