Canadian dollar dips as oil prices ease off one-month highs

Wed Apr 5, 2017 4:23pm EDT
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar edged lower on Wednesday against the greenback as oil prices eased off one-month highs, while minutes from the Federal Reserve's latest meeting supported the view that Canadian and U.S. monetary policy will diverge.

Most Fed policymakers think the U.S. central bank should take steps to begin trimming its $4.5 trillion balance sheet later this year as long as economic data holds up, the minutes showed.

Earlier in the day, data showing U.S. private-sector employers created more jobs than expected in March supported expectations of at least two more interest rate hikes from the Fed this year.

"There is an expectation that interest rate differentials are going to continue to diverge, which is putting the Canadian dollar under pressure," said Scott Lampard, head of global markets at HSBC Bank Canada.

U.S. crude CLc1 prices settled 12 cents higher at $51.15 a barrel, but had pared some gains as support from an outage at the largest UK North Sea oilfield was offset by a surprise increase in U.S. crude inventories to a record high. [O/R]

Oil is one of Canada's major exports.

The Canadian dollar CAD=D4 ended at C$1.3427 to the greenback, or 74.78 U.S. cents, weaker than Tuesday's close of C$1.3406, or 74.59 U.S. cents.

The currency traded in a range of C$1.3379 to C$1.3435.   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