Canada Dollar Reaches One-Year High on Central Bank Divergence

Canada's dollar touched a one-year high versus its U.S. counterpart and outperformed all of its peers as investors anticipated the Federal Reserve will announce more stimulus this week to sustain growth in the nation's largest trading partner.

The Canadian currency rose against 14 of its 16 most-traded counterparts tracked by Bloomberg after Bank of Canada Governor Mark Carney said last week an increase in interest rates “may become appropriate.” The Federal Open Markets Committee meets Sept. 12-13. The greenback has weakened 22 percent against the Canadian dollar since the U.S. central bank introduced its first round of so-called quantitative easing in December 2008.

“The market is quite optimistic about the Fed unveiling some sort of quantitative easing and therefore we are seeing a fairly good overall tone,” Blake Jespersen, managing director of foreign exchange in Toronto at Bank of Montreal (BMO), said in a phone interview. “It seems to be what all investors are talking about this week and positioning for.”

via Bloomberg