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Loonie hits 13-month high as Greenback weakens

There is, however, data from StatsCan that suggests manufacturing shipments have slowed.


September 14, 2012
by The Canadian Press

TORONTO—The Canadian dollar has surged to a fresh 13-month high, while the greenback weakened against a variety of currencies after the US Federal Reserve unveiled a third round of economic stimulus to help a weak economy.

The loonie was off early highs but still up 0.39 of a cent to 103.66 cents US after the US central bank said it will spend $40 billion a month on a new round of bond purchases—and will continue to do so until the job market shows substantial improvement.

The money will be spent on mortgage backed securities to keep interest rates low, encourage lending and support the slow recovery of the housing sector.

The loonie has surged more than 2.75 cents over the last week as the European Central Bank announced a plan to purchase government bonds in order to keep eurozone borrowing costs under control and speculation mounted the Fed would act to support a slowing economy.

Commodities rose sharply as the Fed program raised demand prospects for oil and metals.

On the economic front, there was data showing slowing Canadian manufacturing shipments and US retail sales.

Statistics Canada said that manufacturing sales fell 1.5% to $48.3 billion in July, the third decrease in five months. The agency said that declines in transportation equipment were largely responsible for the overall drop.

©The Canadian Press