North American markets closed in positive territory yesterday, driven by financial stocks, which rose as economic news supported speculation that the U.S. Federal Reserve would spend more money to stimulate the economy.
"The financial markets are now anticipating that the Bank of Canada will put its rate normalization campaign on hold for several months," said Yanick Desnoyers, assistant chief economist at National Bank Financial, in a note, adding that, at this point, Canadian monetary policy is not as important as the actions of the Fed in determining the loonie's fate.
"The combination of a near generalized decline in the U.S. dollar and a concurrent increase in commodity prices should give the Canadian dollar a powerful boost, lifting it past the greenback and keeping it there for a good while. Unfortunately, this means that businesses in the Canadian manufacturing sector must brace for yet another headwind."
By KIM COVERT, Postmedia News
October 19 2010
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