Canadian and U.S. dollars.Ryan Remiorz/The Canadian Press
The Canadian dollar was lower Wednesday as the greenback gained ground ahead of the release of the minutes of the latest meeting of the U.S. Federal Reserve during the afternoon.
The commodity sensitive currency fell 0.56 of a cent (U.S.) to 95.7 cents as the stronger American dollar helped send commodity prices lower. That is because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated.
Many analysts think the Fed judges the economy is strong enough to start to let up on its monthly $85-billion of bond purchases, a program which has kept rates low.
Strong housing data out Wednesday bolstered that point of view as the National Association of Realtors said that existing house sales ran ahead 6.5 per cent during July, much higher than the 0.4 per cent rise that economists had expected. That translated into sales at an annual rate of 5.39 million.
But there is nervousness surrounding the tapering of these asset purchases since the latest quantitative easing effort has also fuelled a strong rally on the U.S. equity markets this year. Analysts believe the Fed could start tapering its asset purchases as early as September.
The minutes will be released at 2 p.m. EDT.
Aside from the minutes, investors will have the monthly existing home sales figures from the National Association of Realtors to digest. One reason why the Fed tapering expectations have ratcheted up in recent months has been the improvement in the U.S. housing market.
On the commodity markets, the October crude contraction the New York Mercantile Exchange down 49 cents to $104.64 a barrel.
September copper slipped five cents to $3.29 a pound while December bullion lost $4.50 to $1,368.10 an ounce.
Bond yields were higher with the benchmark, 10-year U.S. Treasury up 0.02 of a point to a two-year high of 2.84 per cent. Yields started rising in late May after Fed chairman Ben Bernanke first mentioned the possibility of the Fed tapering its asset purchases and have surged about 120 basis points since then.