(The Canadian Press) TORONTO – The Canadian dollar was higher Wednesday morning as the U.S. dollar weakened prior to a mid-afternoon announcement by the U.S. Federal Reserve on interest rates.
The loonie rose 0.16 of a cent to 95.67 cents US amid expectations that the Federal Reserve will indicate it won't be cutting back on its key stimulus of asset purchases until next year.
The expectation that the Fed will carry on with its US$85 billion of bond purchases is a reversal from just six weeks ago at the time of the last meeting, when it was generally thought the central bank judged the economy strong enough to start cutting back.
Since then, a 16-day partial government shutdown shaved an estimated $25 billion from economic growth this quarter. And a batch of tepid economic data pointed to a still-subpar economy, all pointing to a Federal Reserve content to leave tapering until 2014.
Traders also looked to the release of economic growth figures for August. Statistics Canada is expected to report Thursday that the economy grew by 0.2% during the month.
Meanwhile, data in the U.S. released Wednesday showed inflation rising modestly during September. The Consumer Price Index grew by 0.2% during the month following a 0.1% rise in August.
The December crude on the New York Mercantile Exchange was down 79 cents to US$97.41 a barrel.