The Canadian dollar got a bit of a boost earlier today, gaining after remarks made by the governor of the Bank of Canada. Divergence between central banks is leading to gains for the loonie.
Bank of Canada Governor Mark Carney mentioned last week that there is a possibility that rates will have to go up in Canada. The economy has been showing signs of better than expected growth recently, and Carney thinks that perhaps interest rates will need to rise to slow it down.
This represents a divergence from the policy expected from the Federal Reserve. At the conclusion of the two-day meeting later this week, many think that Ben Bernanke will announce the possibility of adding more stimulus.
With the possibility that the US dollar will be weakened by an increase in the money supply. Contrast that with the fact that the loonie is likely to reap the benefits of a higher interest rate, if the Bank of Canada does end up making changes opposite to what comes from the Federal Reserve.
At 4:10 GMT USD/CAD is down to 0.9762, which is lower than the open at 0.9767. EUR/CAD is on the way up, at 1.2474 from the open at 1.2464. GBP/CAD is down to 1.5628 from the open at 1.5618.
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