Canadian dollar hits 12-day low, pressured by divergent rate outlook
By Fergal Smith
TORONTO (Reuters) - The Canadian dollar weakened on Tuesday to hit a 12-day low against its U.S. counterpart, whose gains against a basket of major currencies offset higher prices for oil, a major export for Canada.
The greenback .DXY climbed after hawkish comments from Federal Reserve officials pointed to a potential U.S. interest rate increase next month.
"Our view is that the Canadian dollar would likely weaken over the medium term and that's really based on this outlook for higher U.S. interest rates," said Eric Viloria, currency strategist at Wells Fargo.
He says the interest-rate differential between Canada and the United States has become a more important driver for the direction of the Canadian dollar than crude oil.
U.S. crude CLc1 prices settled 66 cents higher at $54.06 a barrel after the Organization of the Petroleum Exporting Countries said it was sticking to its agreement to cut production and hoped compliance with the deal would be even higher. [O/R]
The Canadian dollar CAD=D4 ended at C$1.3138 to the greenback, or 76.12 U.S. cents, weaker than Monday's close of C$1.3101, or 76.33 U.S. cents, according to Reuters data.
The currency's strongest level of the session was C$1.3100, while it touched its weakest level since Feb. 9 at C$1.3165.
Monday was a market holiday in Canada. The Bank of Canada's official close on Friday was C$1.3099, or 76.34 U.S. cents. Continued...