TORONTO – The Canadian dollar was lower Wednesday as the greenback gained ground ahead of the release of the minutes of the latest meeting of the U.S. Federal Reserve during the afternoon.
The commodity sensitive currency fell 0.43 of a cent to 95.83 cents US as the stronger American dollar helped send commodity prices lower. That is because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated.
Many analysts think the Fed judges the economy is strong enough to start to let up on its monthly US$85 billion of bond purchases, a program which has kept rates low.
But there is nervousness surrounding the tapering of these asset purchases since the latest quantitative easing effort has also fuelled a strong rally on the U.S. equity markets this year. Analysts believe the Fed could start tapering its asset purchases as early as September.
The minutes will be released at 2 p.m. EDT.
Aside from the minutes, investors will have the monthly existing home sales figures from the National Association of Realtors to digest. One reason why the Fed tapering expectations have ratcheted up in recent months has been the improvement in the U.S. housing market.
On the commodity markets, the October crude contraction the New York Mercantile Exchange down 68 cents to US$104.43 a barrel.
September copper slipped two cents to US$3.31 a pound while December bullion lost $6.80 to US$1,365.80 an ounce.