The Canadian dollar advanced against its southerly rival on Thursday, pushed higher by remarks of a high-level official with the central bank of the U.S., Bloomberg reports
The Canadian dollar followed the upward trajectory of equities and commodities in the aftermath of Wednesday commentary by Janet Yellen, vice chair of the U.S. Federal Reserve. She said at a Wednesday speaking engagement that interest rates in the nation hosting the world's largest economy are slated to remain low to support the economic recovery.
The monetary unit of Canada bounced back from touching its lowest level in three months as the Australian dollar also rallied.
"The Canadian dollar is being pulled higher by the commodity currencies generally, with the Aussie leading the way," global head of foreign-exchange strategy Adam Cole with the Royal Bank of Canada in London told the news source. "That's dragging the other commodity currencies with it, and also perhaps on the slightly higher expectation of Fed easing on the back of Yellen."
Dow Jones Newswires reports
the value of the Canadian dollar also benefited against the U.S. dollar from the weekly employment report issued by the Department of Labor, which caused concerns about the development and growth of the U.S. economy. Canada's monetary unit is sensitive to the economic and financial news from the U.S. since it is a top partner for trade and commerce.
Initial unemployment claims for the week ended April 7 gained 13,000 to 380,000. The Labor Department was anticipating 358,000 new applications for jobless benefits.
Combined with a weaker jobs report issued earlier this month on Good Friday, conjecture mounted about momentum in the world's largest economy slackening. The increase this week notches the sharpest climb in roughly 12 months.
the loonie's advances also coincided with that of the common currency of the European Union as well as the increasing price of crude oil futures. The nation's economy is based on the export of its natural resources and crude oil is the top commodity.
Camilla Sutton, Scotia Capital's chief currency specialist, credited the Wednesday speech by the U.S. Federal Reserve official as being most beneficial to the Canadian dollar.
Yellen talked of preserving low interest rates while also leaving open additional stimulus and the purchase of debt, which floods the market with the world's reserve currency and, consequently, pulls down the value of the U.S. dollar.
"If there's room for further quantitative easing that would be loosening of monetary policy, which is in turn negative for the U.S. dollar," Sutton told Reuters.
The Canadian dollar was not very strongly impacted by the Italian bond auction as the Mediterranean nation saw bond yields increase more than one percentage point in one month to 3.89 percent.
Budgetary issues in Spain and preoccupations about global growth are spurring investors to seek a higher return when purchasing Italian debt.
The Canadian Press credited
the loonie's climb to the nation's trade surplus slimming down.
From this past January to February, Statistics Canada reports the country's trade surplus plunged from nearly $2 billion to $300 million. Exports fell 3.8 percent, which the news source linked with auto shipments falling and imports minimally changing.
Export adjustments in Canada are attributable to a decline in energy products sent to the U.S. The U.S. trade deficit slimmed down to $46 billion in February after having registered at $52.5 billion during the month prior, according to the Canadian Press. Those gains are significantly larger than the anticipated results.
The loonie also was not as strongly impacted by the World Bank reducing the growth outlook it issued to China, host of the globe's second largest economy.