TORONTO: The Canadian dollar climbed against the US currency on Monday after remarks from US Federal Reserve Chairman Ben Bernanke reinforced expectations that interest rates will stay low, which helped riskier assets and hurt the greenback.
Bernanke's warning that the US economy needs to grow more quickly to get the unemployment rate down underscored views easy monetary policy would remain in place for some time and fanned expectations for more quantitative easing.
"The market certainly has latched on to that view with respect to a weaker US dollar and Canada stands to benefit, as well as what we've seen in commodities, more notably in precious metals as opposed to the price of oil," said David Tulk, chief Canada macro strategist at TD Securities.
"It's where you look for any expectation that quantitative easing is still on the table," Tulk added, noting commodities were up in general.
Gold notched its biggest one-day gain in a month as renewed hopes for further US monetary easing fueled bullion buying as a hedge against long-term inflation and economic uncertainty.
Disappointing US home sales data on Monday reinforced the pessimistic outlook, with contracts to purchase previously owned US homes unexpectedly falling in February.
The Canadian dollar ended the North American session at C$0.9912 versus its US counterpart, or $1.0089, up from Friday's North American close at C$0.9987 against the US currency, or $1.0013.
Tulk said markets will look to Thursday's Canadian federal budget and Friday's January GDP data for further direction.
Canadian bond prices edged down across the curve, tracking US Treasuries lower as demand for safe-haven government debt eased. Canada's two-year bond slipped 2 Canadian cents to yield 1.250 percent. The 10-year bond lost 10 Canadian cents to yield 2.191 percent.
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