The Canadian dollar weakened against the greenback, with the exchange rate pushing above the 50-Day moving average for the first time since July to reach a fresh monthly high of 1.0984, and the USD/CAD is likely to hold its broad range over the following week as investors weigh the outlook for future policy. The Bank of Canada announced it will extend the C$ 125B mortgage purchase program to “at least the end of January 2010” earlier this week in order to strengthen the banking sector, but said that two of the three emergency programs will be concluded at the end of October as the central bank sees “lower market-based funding costs and the lack of coverage in recent auctions for temporary liquidity facilities.” Moreover, Governor Mark Carney warned businesses will need further “restructuring” as he expects trade conditions to remain subdued over the next 18 months, and went onto say that it will take some time before “we are really going to see true growth, self-sustaining private sector growth” as the government stimulus begins to taper off.
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