Canadian Dollar Falls Even After Fed Extends Operation Twist
The Canadian dollar fell today even after the US Federal Reserve announced that it is going to expand the stimulating measures. The currency surprised traders as it managed to advance versus the Japanese yen.
The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative.
The announcement had rather little impact on the market as such move was expected. Additionally, traders were disappointed that the program will persist only by the end of the year. Some market participants were hoping that the central bank would extend its asset purchase program longer.
The Fed also released its economic projections today. The bank lowered the expected range of US gross domestic product growth this year to 1.9 percent to 2.4 percent from 2.4 percent to 2.9 percent in the April estimate. The unemployment rate is expected to be at 8 percent to 8.2 percent, compared to the previous expectations of 7.8 percent to 8 percent.
USD/CAD climbed from 1.0175 to 1.0196 and EUR/CAD advanced from 1.2907 to 1.2964 before trading at about 1.2935 as of 22:26 GMT today. At the same time, CAD/JPY managed to edge up from 77.54 to 77.94.
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Earlier News About the Canadian Dollar:
- CAD Drops as Poor Market Sentiment Slashes Appeal of Risky Assets (2012-06-18)
- Canadian Dollar Pulls Back on Global Economic Concerns (2012-06-15)
- Poor US Fundamentals Sap Strength of Loonie (2012-06-13)
- Canadian Dollar Falls Back as Risk Appetite Fades (2012-06-11)
- Loonie Suffers from Poor Canadian Employment Data, Recovers (2012-06-08)