TORONTO: The Canadian dollar strengthened to its highest level in more than two months against its U.S. counterpart on Thursday as equity markets rose and after the Bank of Canada pushed back against the notion it would soon shift to interest rate cuts.
The loonie was trading 0.5% higher at 1.3320 to the greenback, or 75.08 U.S. cents, after touching its strongest since Nov. 18 at 1.3304.
The gain for the loonie came as Wall Street shares rose after data showed the U.S. economy expanded at a faster-than-expected pace in the fourth quarter. Canada sends about 75% of its exports to the United States, including oil.
U.S. crude futures were up 2.1% at $81.83 a barrel on expectations that demand will strengthen as top oil importer China reopens its economy and on news U.S. crude inventories have risen less than expected.
BoC Governor Tiff Macklem on Wednesday said he was focused on whether interest rates would need to go higher and was not even considering a cut.
Traders are betting that the central bank will ease as soon as October after it signaled a pause in its tightening campaign following the latest rate hike.
After Canada’s central bank posted its first ever quarterly loss, the federal government plans to introduce legislation enabling the central bank to retain profits rather than remit them to the government, Macklem said.
Canadian wholesale trade most likely fell 1.8% in December from November, largely reflecting lower sales in the machinery, equipment and supplies subsector, Statistics Canada said in a flash estimate on Thursday.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year rose 3.9 basis points to 2.842%.
Comments
Comments are closed.