FP News Top Story

The Canadian Press - ONLINE EDITION

Canadian dollar up on positive trade data, traders await further Fed stimulus

By: Malcolm Morrison, The Canadian Press

Posted: 12/11/2012 7:39 AM | Comments: 0 | Last Modified: 12/11/2012 3:25 PM

TORONTO - The Canadian dollar closed higher Tuesday while the American currency weakened ahead of an expected announcement of further economic stimulus by the U.S. Federal Reserve. Such a move would involve the Fed printing additional money to buy up more bonds.

The loonie rose 0.08 of a cent to 101.4 cents US amid data showing Canada’s trade picture improved significantly in October.

Statistics Canada says the merchandise trade deficit shrank to $169 million, which was a big improvement over the figure in September, when the deficit was $1 billion. Exports rose one per cent to $38.1 billion while imports fell 1.2 per cent to $38.3 billion.

Economists expect that the Fed will announce at the end of its two-day meeting Wednesday that it will begin buying US$40 million of long-term treasury securities each month.

This would be on top of an existing plan announced in September that involves the Fed buying $40 billion per month in mortgage-backed securities.

The Fed’s US$400-billion stimulus program, known as Operation Twist, is set to expire after 2012. It involved the Fed buying $400-billion of longer-term Treasuries and simultaneously selling some of the shorter-dated issues it already held in order to bring down long-term interest rates.

Traders also took in data suggesting Germany will be able to avoid slipping into recession as an index of investor optimism rose more than expected in December.

The ZEW indicator of economic sentiment rose to plus 6.9 points, from minus 15.7 in November. Markets had expected the index to rise only to minus 11.5. Germany’s economy grew a modest 0.2 per cent in the third quarter.

Commodities were generally weak as the January crude contract on the New York Mercantile Exchange was unchanged at US$85.56 a barrel.

Copper prices gave up some of Monday's four-cent rise as the March contract dipped a penny to US$3.69 a pound.

February gold faded $6.20 to US$1,708.20 an ounce.

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.

* Required

In which story did you find the error? *
Please post the headline of the story or the title of the video with the error.
What was the error? *
Please post exactly what was wrong with the story.
What should we have written?
Please indicate your source for the correct information.
Who else should we interview to improve this story?
Please include any contact information you may have.
Can we contact you in the future for advice on stories about this topic?
Yes

No
First Name: *
Last Name: *
E–mail Address: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Phone: *
This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.
Colour:
Are you blue? If you can see this, leave it blank and get some CSS support.
Enter the words that you see: * This is to prevent our forms from being filled out automatically.
You have failed to correctly identify the words in the box above. Please try again.

More FP News Top Story

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.