TORONTO: The Canadian dollar firmed against its US counterpart on Monday, rebounding from an earlier near nine-month low, as broader losses for the greenback offset dwindling expectations for Bank of Canada interest rate hikes.
At 4 p.m. ET (2000 GMT), the Canadian dollar was trading 0.3 percent higher at C$1.3062 to the greenback, or 76.56 US cents.
The currency’s strongest level of the session was C$1.3046, while it touched its weakest since June 28 at C$1.3124.
“It really feels like a little bit of a pause here (in the loonie’s decline) ahead of the FOMC,” said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. “I’m not sure the market is buying expectations for rate hikes from the Bank of Canada for 2018.”
The Canadian dollar fell more than 2 percent last week as comments from Bank of Canada Governor Stephen Poloz reinforced expectations the central bank can take its time raising rates after hiking three times since last July.
Chances of a rate hike by May have slipped to less than 60 percent from around 75 percent earlier this month, data from the overnight index swaps market shows.
In contrast, financial markets look for the Fed to increase rates on Wednesday for the first time this year.
The US dollar fell against a basket of major currencies after four straight weeks of gains as a Reuters report, that European Central Bank officials were shifting their debate from bond purchases to the expected path of interest rates, boosted the euro.
US President Donald Trump appears to be “enthusiastic” about coming to an agreement on renegotiating the North American Free Trade Agreement (NAFTA), Canada’s Prime Minister Justin Trudeau said.
Canada sends about 75 percent of its exports to the United States. Its economy could be hurt if NAFTA is scrapped.
The price of oil, one of Canada’s major exports, slipped as Wall Street slid and energy market investors remained wary of growing crude supply.
Source: Brecorder.com
