Canada’s dollar posted its biggest decline in five years as accelerating economic growth in the U.S. convinced the Federal Reserve to slow monetary stimulus even as the Bank of Canada warned of deflationary risks.
The euro fell for a fifth day against the dollar as signs of economic weakness in the single-currency bloc fueled speculation the European Central Bank will cut interest rates as soon as at its meeting next week.
The gap in Canadian and U.S. benchmark interest rates is at a 15-year high based on the Taylor rule formula for determining optimal rates, signaling borrowing costs are poised to rise further in Canada.
The euro gained for a third straight month versus the yen after the currency region’s consumer-price index rose more this month than forecast, fueling bets the European Central Bank will refrain from further stimulus.
Canada’s dollar touched the weakest level in more than two years against its U.S. peer as the central bank prepared to meet Dec. 4 amid bets it will be slower to reduce monetary stimulus than the Federal Reserve.