Canada dollar gains with commodities, Fed minutes weigh

Wed Jul 11, 2012 4:55pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - Canada's dollar closed stronger against the U.S. currency on Wednesday, helped by higher commodity prices, but gains were limited by a less-dovish-than-expected U.S. Federal Reserve and concerns about Europe's debt crisis.

U.S. stocks, typically a gauge of how willing investors are to buy riskier assets, fell as minutes from the last Federal Reserve meeting showed policymakers are open to the idea of providing more economic stimulus, but that conditions might need to worsen for a consensus to build. .N

"It looks like the Fed is content to wait things out a little longer," said Steve Butler, managing director of foreign exchange trading at Scotiabank.

"Equities have turned around on a less dovish FOMC minutes and just general malaise in the market. Risk sentiment seems to be still on the negative side."

After climbing early in the session, Canada's currency managed to eke out a gain and ended at C$1.0199 versus the U.S. dollar, or 98.05 U.S. cents, slightly firmer than Tuesday's North American session close at C$1.0226 against the greenback, or 97.79 U.S. cents.

It drew support from firmer oil and gold prices. <O/R>

"We're seeing a small boost to the Canadian currency coming from higher commodity prices," said Charles St-Arnaud, economist and currency strategist at Nomura Securities in New York.

"That's helping to support the Canadian dollar. But there's still concern out there about what's happening in Europe."   Continued...

Images of the front and the back of the new Canadian 50 dollar bill, made of polymer, are seen on display before a news conference in Quebec City, March 26, 2012. REUTERS/Mathieu Belanger