Adrian Wyld
The Canadian dollar was higher Thursday amid a lower U.S. currency, rising 0.26 of a cent to 98.09 cents (U.S.).
The loonie broke a four-day losing streak on Wednesday, rising almost a cent while the greenback weakened against other currencies amid further speculation about how the U.S. Federal Reserve will structure a second round of so-called quantitative easing to stimulate recovery. That measure involves the central bank printing money to buy up more government bonds and get money circulating into the economy.
Currency markets are focused on South Korea where G20 finance ministers and central bank governors are getting together Friday and Saturday to defuse international currency tensions as a festering dispute over exchange rates overshadows debate about reforming the world economy. Their deputies meet Thursday in Gyeongju.
While the Canadian dollar has bounced back from Tuesday's low of 96.4 cents, analysts say a worsening economic outlook could limit loonie strength against the U.S. dollar.
They point to Wednesday's assessment from the Bank of Canada that the Canadian economy likely suffered the worst quarter since the recession during the summer months, and still faces risks ranging from a potential global currency war to a collapse in the housing market.
"Yesterday's BoC Monetary Policy Release was not particularly upbeat towards the Canadian economic outlook," observed John Curran, senior vice-president at CanadianForex, a currency trader.