The value of the Canadian dollar edged down against the U.S. dollar on Tuesday one day after rallying against its southerly rival, according to
Dow Jones Newswires.
No significant economic data was scheduled to be released by Canada, shifting a focus on the top economic officials with the U.S. Federal Reserve. Chairman Ben Bernanke, the president of the Federal Reserve Bank of New York, a Federal Reserve governor and three non-voting members each are scheduled to speak on Tuesday.
The Monday rally of the loonie was attributed to Bernanke's speech early in the day when he left open the possibility of additional monetary easing as a method of creating jobs and lowering the nation's unemployment rate.
losses against the Canadian dollar to preoccupations about the sovereign debt crisis in the euro zone rearing again. For two-plus years, the debt scourge has attacked nations' banks, markets and public finance systems as the region's leaders attempted to solve the crisis while countries were awarded bailouts.
The loonie's losses on Tuesday mark the first day of slippage against the world's reserve currency in the past three trading sessions. In addition to reacting negatively to the euro zone debt dilemma, the loonie's losses were augmented by a report noting American consumer confidence this month is on the decline.
"I don't think there's much reason for the Canadian dollar to be much stronger than where it is now," director of foreign exchange
Blake Jespersen with Bank of Montreal in Toronto told the news source. "The Canadian collar is comfortable trading right around parity. Investors are somewhat cautious of entering the market - Europe continues to be a bit of a concern."
The value of the loonie during the past month has increased about 1.6 percent against the U.S. dollar, in part because of the climb in value of crude oil. The energy commodity is the top natural resource of the nation with an economy, commerce and trade based on its exports of native products.
But slippage against crude oil futures on Tuesday also pulled down the value of the nation's monetary unit, Bloomberg reports.
With three-plus days remaining in the first quarter of 2012, the loonie's climbs against the U.S. dollar during the three-month period are driving toward 2.9 percent, which thus far trumps the 2.8 percent that the Canadian dollar achieved against the world's reserve currency during the three-month period of the final quarter of last year.
the U.S. dollar was drawn down in value by Bernanke's commentary on Monday morning.
The U.S. Federal Reserve chair vividly noted the institution he leads is aiming to slash unemployment while leaving interest rates low, which one strategist noted is aimed at beng "accommodative."
"The Fed is still remaining accommodative," macro strategist Mazen Issa with TD Securities told Reuters.
Yet discussion about whether the Fed plans to employ a third round of quantitative easing remains. More colloquially known as "QE3," the strategy employs the purchase of debt and floods the market with the U.S. dollar, typically watering down the value of the monetary unit and providing competing currencies the chance to advance against the greenback.
But if not intervention occurs as strong economic data is released by the U.S., the dollar will continue strengthening and the recovery from the Great Recession will continue.
The chief of the U.S. Federal Reserve "is flagging the issue that the labor market remains far from being improved and that would be a key issue to doing more QE, which right now is looking quite remote," Issa told Reuters, noting the Bank of Canada is not inclined to increase lending rates.