A Statistics Canada study reveals a close link between the value of the loonie and the pace of business investment.PAUL CHIASSON/The Canadian Press
The Canadian dollar closed lower Wednesday while the greenback appreciated after the U.S. Federal Reserve confirmed that it would be wrapping up its quantitative easing (QE) stimulus program at the end of the month.
The loonie fell 0.16 of a cent to end at 89.36 cents (U.S.) as the Fed also kept its key rate unchanged at close to zero, and said it is in no hurry to raise rates.
Some traders have viewed the end of this stimulus with some trepidation since the program of massive bond purchases kept long-term rates low and helped encourage the strong rally on stock markets over the past few years.
But economic conditions have improved dramatically since the Fed first launched its initial QE program in the wake of the 2008 financial collapse. It noted Wednesday that softness in the labour market is also gradually diminishing.
Markets also looked for reassurance that the Federal Reserve will keep short-term rates low after QE ends and got it as the Fed kept the words "considerable period" in its announcement.
Meanwhile, the latest reading on American and Canadian gross domestic product also comes out this week. Markets are looking for data to show that U.S. GDP during the third quarter grew at an annualized rate of 3 per cent.
Traders will also find out how the Canadian economy fared during August. Statistics Canada was expected to report that gross domestic product for the month came in flat.
On the commodity markets, December crude ran up 78 cents to $82.20 a barrel. Prices gained momentum as data showed that U.S. crude oil inventories increased by 2.1 million barrels last week, which was slightly below expectations of an increase of 2.8 million barrels.
December copper was up for a fifth day, ahead 1 cent to $3.10 a pound while December gold declined $4.50 to $1,224.90 an ounce.