Canadian Dollar Plunges Most in Week Since January
Saturday, May 1st, 2010
The Canadian dollar dropped the most in a week since January, ending the week by falling 1.1 percent to C$1.0162 for each U.S. dollar near the end of trading. Now one Canadian dollar will buy 98.41 U.S. cents after the downward move.
For the week dipped 1.7 percent, the largest fall since January 22.
Some of this may have been in response to the central bank governor of Canada, Mark Carney, who changed his language somewhat on whether or not an interest rate will be instituted at the next rate meeting on June 1.
Investors have been pricing the dollar on the assumption that will be the case and also the bank holding the benchmark rate at 0.25, a record low. The bank also dropped a cut a conditional commitment which would keep that through June.
Carney stated before Parliament that there are no guarantees going forward, and some may be speculating too much on that being a certainty.
Last week the Canadian dollar rose when the Bank of Canada implied there would be an increase in interest rates, so that may play on the market until a more clear signal is given.
Either way, the currency should hold fairly strong no matter which way things go, although it could fall it little more than expected if they do change their minds.
Article by Gary B
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: canadian dollar , currency , interest rates
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