C$ holds near 12-month highs as Fed eyed
By Solarina Ho
TORONTO (Reuters) - The Canadian dollar hit its loftiest level in more than one year against its U.S. counterpart on Monday, outperforming other major currencies amid hopes of further stimulus in the United States.
The market is pricing in some expectation that the Federal Reserve will decide on a third round of monetary easing when it meets later this week, following data last Friday that showed U.S. jobs growth in August was well below what would normally be needed to put a dent in the jobless rate.
"The risk backdrop remains positive here. The weaker-than- expected U.S. employment number has fueled the fire for the market looking for a potential nod to QE3 out of the Fed," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets.
The Canadian dollar finished at C$0.9775 against the greenback, or $1.0230, firmer than Friday's North American session close at C$0.9782, or $1.0223.
Earlier in the session, the currency hit a session high of C$0.9755 to the U.S. dollar, or $1.0251, its strongest level since September 1, 2011.
Further stimulus will bolster non-U.S. currencies and analysts say the market will be looking to see exactly how much money the Fed will pump into the economy.
Traders also cited improved risk appetite in general after the European Central Bank last week unveiled a plan to cut borrowing costs for its most indebted countries.
Weak trade data out of China on Monday underlined the likelihood of more Beijing-backed spending, which could also bolster the commodities-linked Canadian dollar. Continued...