BUSINESS

Loonie rises on positive speeches by U.S., even though commodity prices drop

05/21/2013 08:41 EDT | Updated 07/21/2013 05:12 EDT
TORONTO - The Canadian dollar was ahead Tuesday following signs that the U.S. Federal Reserve may not put the brakes on its aggressive monetary stimulus program any time soon.

The loonie finished up 0.22 of a cent at 97.39 cents US.

At separate events, two Fed presidents reiterated that the best course of action for the U.S. central bank is to continue with its $85-billion-a-month bond buying program, also known as quantitative easing.

Investors have been worried that the Fed might begin pulling back its monetary stimulus since recent data has shown rosier-than-expected outlooks for housing and jobs in the U.S.

Critics have suggested that the recent record high closes for the Dow and that S&P have been due to the relatively easy money coming from the Fed and worry about how much the markets may suffer once the central bank turns off the tap. This, in turn, might well have an impact on the loonie.

Both the Dow and the S&P closed at records again on Tuesday.

In Canada, outgoing Bank of Canada governor Mark Carney delivered his last scheduled public speech Tuesday in Montreal, where he urged the country to seize its natural advantages.

Carney told a crowd at the board of trade that the Canadian financial and economic system had served Canada well during the recent recession and in the current recovery. However, he said country shouldn't rest on its laurels and just wait until the rest of the G7 countries repair their economies.

His speech had little impact on the markets, as investors are more interested now in what incoming governor Stephen Poloz will say when he assumes the role at the beginning of June.

Carney is leaving Canada to head the Bank of England.

On the commodities front, June gold dropped $6.50 to US$1,377.60 an ounce. The July crude contract dipped 75 cents to US$96.18 a barrel, while the June crude dropped 55 cents to US$96.16 a barrel. July copper fell two cents to US$3.34 a pound.