TORONTO – The Canadian dollar was slightly lower late morning Tuesday while traders looked ahead to a speech by U.S. Federal Reserve chairman Ben Bernanke later in the day.
The loonie dipped 0.06 of a cent to 100.28 cents US after running ahead almost half a US cent Monday.
However, analysts say the speech is likely to produce weakness in the greenback as Bernanke is likely to remind markets that the Fed will expand its quantitative easing program in December to help along a slow U.S. economic recovery. QE involves the central bank printing money to buy up bonds.
The Fed has been purchasing $40 billion per month of mortgage-backed securities since September and the central bank has signalled the program won’t end until there is a substantial improvement in the labour market.
Analysts believe the Fed will expand the program to include outright purchases of Treasury bonds.
Also focusing traders Tuesday was Moody’s Investor Services’ downgrade of France’s AAA credit rating. Moody’s cited concerns over its prospects for economic growth and its exposure to Europe’s financial crisis. S&P had also downgraded Europe’s second-biggest economy in January.
Meanwhile, European Union officials will make a fresh try Tuesday to reaching a political accord on desperately needed bailout loans to Greece.
Greece is still waiting for a €31.5-billion loan, the latest instalment of bailout money which is keeping the country afloat. The loan was due to have been signed off last week but a meeting of the finance ministers from the 17 European Union countries that use the euro failed to agree on how to get Greece’s bailout program back on track.
Commodity prices were mixed following big gains on Monday with the January crude contract on the New York Mercantile Exchange giving back some of the strong gains registered over the past two sessions, down $1.75 cents to US$87.53 a barrel. Prices had run up sharply on worries that fighting between Israel and Hamas could spread, jeopardizing shipments of oil from the Mideast.
December copper was unchanged at US$3.53 a pound following an eight-cent jump Monday.
December bullion was down $3.40 to US$1,731 an ounce.