C$ notches monthly gain as Fed signals rate hike slowdown


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TORONTO — The Canadian dollar strengthened against its U.S. counterpart on Wednesday, adding to its monthly gain, as oil prices rose and Federal Reserve Chair Jerome Powell said the central bank could soon move to a less aggressive pace of interest rate hikes.

The loonie was trading 1% higher at 1.3440 to the greenback, or 74.40 U.S. cents, rebounding from a its weakest level in nearly four weeks which it touched during Tuesday’s session at 1.3645.

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For the month, the currency was up 1.4%, its second straight month of gains.

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“We have taken off on Powell’s comments,” said Michael Goshko, senior market analyst at Convera Canada ULC, adding that a lower peak for interest rates could weaken the U.S. dollar and be “less threatening” for the global economy.

Wall Street jumped and the greenback fell against a basket of major currencies after Powell said the central bank might scale back the pace of its interest rate hikes as soon as December.

Investors have worried that aggressive Fed tightening could tip some major economies, including Canada into recession.

The price of oil, one of Canada’s major exports, settled 3% higher at $80.55 a barrel on signs of tighter supply and optimism over a Chinese demand recovery.

The Bank of Canada has also been hiking interest rates at a rapid pace. Canadian jobs data for November, due on Friday, could help guide expectations for additional tightening.

Canadian government bond yields edged lower across much of the curve, tracking the move in U.S. Treasuries.

The 10-year eased one basis point to 2.986%, after earlier touching its highest in more than one week at 3.087%. (Reporting by Fergal Smith Editing by Nick Zieminski Editing by Sandra Maler)


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