Canadian dollar stronger as government releases stay-the-course budget

Wed Mar 22, 2017 7:17pm EDT
 
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(Reuters) - The Canadian dollar strengthened slightly against its U.S. counterpart on Wednesday, but barely changed after the government unveiled a stay-the-course federal budget that targeted export growth, while earlier losses were reversed as the greenback fell.

Canada's Liberal government's budget contained few surprises, in line with expectations that Ottawa wants to wait to see what impact U.S. President Donald Trump’s still-evolving policies will have.

At 6:15 p.m. ET (2216 GMT), the Canadian dollar CAD=D4 was trading at C$1.3334 to the greenback, or 75.00 U.S. cents, little changed from the Bank of Canada's official close of C$1.3327, or 75.03 U.S. cents.

The U.S. dollar had fallen as investors rethought growth expectations under the Trump administration that had pushed the greenback to a 14-year peak and stocks to record highs.

The dollar index .DXY, which measures the currency against a basket of six other currencies, touched a near seven-week low of 99.547.

"If these dollar crosses move further in the direction of their current trends, the greenback could suffer from momentum selling," said Fawad Razaqzad, market analyst at Forex.com.

The Canadian dollar's strongest level of the session was C$1.3328, while its weakest level was C$1.3336.

Wednesday's budget blueprint, which is bound to be implemented given the Liberal’s parliamentary majority, reinstated a fiscal cushion, effectively a rainy day reserve set at C$3 billion a year to guard against any unexpected event that could hurt the government books, a move economists praised as prudent.

Oil, one of Canada's leading exports, slipped to its lowest since late November after data showed record-high U.S. crude inventories rising faster than expected, raising doubts over the viability of OPEC-led output cuts.   Continued...

 
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch