Canadian dollar flat vs U.S. dollar, gains against euro, yen

Tue Apr 3, 2012 5:13pm EDT
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By Jon Cook

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart, but rose versus most other major currencies on Tuesday after the U.S. Federal Reserve signaled it was less eager to launch additional monetary stimulus measures.

Minutes released from the Fed's March policy meeting suggested the appetite for another dose of stimulus via quantitative easing, so-called QE3, has eased as the U.S. economic recovery gains momentum.

Market watchers were caught off guard by the Fed's change in tone from late January when the central bank said it would keep interest rates near zero until at least late 2014. Many investors had believed more easing was likely.

"What you saw today was a major repricing in terms of (U.S.) dollar versus all the other crosses," said Stewart Hall, senior currency strategist at Royal Bank of Canada. "But if you look at the Canadian dollar we're just slightly changed."

The Canadian dollar ended the North American session at C$0.9904 against the U.S. dollar, or $1.0097, nearly unchanged from Monday's close at C$0.9903 versus the greenback, or $1.0098.

Canada did outperform most other major currencies, rising against the yen, euro, sterling, Swiss franc and Mexican peso.

The improving American economy has helped boost the Canadian currency this year, particularly as event risks in Europe have subsided. The United States is the biggest destination for Canadian exports.

"There is a very strong connection between what's going on in the U.S. and arguably how Canada evolves economically and in terms of (monetary) policy," said Hall.   Continued...