Canadian dollar dips ahead of Fed decision as oil prices fall

Posted by on December 12, 2017

The Canadian dollar slipped to an 11-day low against its U.S. counterpart on Tuesday as oil prices fell, while the greenback gained against a basket of major currencies ahead of an expected interest rate hike by the Federal Reserve.

At 4 p.m. EST (2100 GMT), the Canadian dollar was trading at $1.2867 to the greenback, or 77.72 U.S. cents, down 0.1 per cent. It touched its weakest since Dec. 1 at C$1.2893.

Still, the overall range was narrow for the fourth straight day, as investors awaited the Fed decision on Wednesday and a speech on Thursday by Bank of Canada Governor Stephen Poloz.

“Everybody is sitting on their hands until we get these risk events out of the way,” said Eric Theoret, currency strategist at Scotiabank.

The U.S. dollar was boosted by data showing an increase in wholesale inflation.

The price of oil, one of Canada’s major exports, retreated on profit taking after prices surged earlier in the day on an unplanned closure of the pipeline that carries the largest North Sea crude oil grade.

U.S. crude futures settled 1.5 per cent lower at $57.14 a barrel.

Bank of Canada Governor Stephen Poloz is due to discuss the issues that keep him awake at night in a speech on Thursday.

The loonie had been pressured last week after the Bank of Canada struck a more dovish tone than investors had expected as it left its benchmark interest rate steady at 1 per cent.

Canadian government bond prices were slightly lower across the yield curve in sympathy with U.S. Treasuries. The two-year dipped 2 cents to yield 1.523 per cent and the 10-year declined 4 cents to yield 1.867 per cent.

The gap between the two-year and 10-year yields narrowed by 0.7 of a basis point to +34.3 basis points, its narrowest since January 2008.

Courtesy: The Globe And Mail

Posted in: Market News


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