Loonie slips, greenback higher on speculation about end of Fed stimulus measures
TORONTO - The Canadian dollar was slightly lower Monday morning while the greenback strengthened against many other currencies on speculation that the Federal Reserve could end its bond-buying stimulus program in the second half of 2013.
The loonie slipped 0.03 of a cent to 101.28 cents US.
The American currency has strengthened in recent days after minutes from the Fed's latest policy meeting last month showed a split over how long to continue the purchases. Some policymakers have concerns that the continued bond purchases, known as quantitative easing, would destabilize the economy.
Prices for oil and copper declined while the greenback gained ground against many other currencies.
A higher U.S. dollar pressures commodities because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated.
The February crude contract on the New York Mercantile Exchange was down 46 cents to US$92.63 a barrel.
March copper dipped three cents to US$3.66 a pound while February bullion gained $7.10 to US$1,656 an ounce.
Traders also took in a move by global regulators to ease new rules obliging lenders to set capital aside. The so-called Basel III rules are a set of new international standards to make sure banks don’t fall back into the sort of trouble that caused the 2008 financial crash. On Sunday, the officials setting those rules delayed the date by which certain amounts of cash had to be readily available.
Amid the biggest beneficiaries on equity markets were ailing Spanish banks, which some had feared would struggle to meet the new cash requirements.