The Canadian dollar fell against its U.S. counterpart for the second day before employment figures forecast to show the nation’s jobless rate increased in December.
The currency weakened against the majority of its most traded peers after the Federal Reserve revealed yesterday it may end monetary stimulus this year, allowing the currency to appreciate. Canada’s unemployment rate is projected to have increased in December to 7.3 percent from 7.2 percent the previous month, according to a Bloomberg survey of 22 economists.
“When you look at a Fed that’s been very dovish, to see any consideration on their part to think about maybe winding back some of the stimulus, or at least thinking about an end date for asset purchases, caught the market a bit off-guard,” said David Tulk, chief macro strategist at Toronto-Dominion Bank, by phone from Toronto. “It was a little bit late in the day where that was released yesterday, so it has a bit more of a disproportionate impact over the European session today and it’s spilled over into the currency.”
The Canadian dollar, known as the loonie for the image of the aquatic bird on the C$1 coin, fell 0.4 percent to 99.17 cents per U.S dollar at 8:57 a.m. in Toronto. One Canadian dollar buys $1.0084.
Policy makers at the U.S. central bank will probably end their $85 billion monthly bond purchases in 2013, according to minutes of their Dec. 11-12 meeting released yesterday.