Canadian dollar gains as oil, global stocks rally

Wed Jun 29, 2016 5:16pm EDT
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By Alastair Sharp

TORONTO (Reuters) - The risk-sensitive Canadian dollar gained against its U.S. counterpart on Wednesday as global financial markets stabilized for a second straight day following volatility triggered by Britain's vote to leave the European Union.

Stock markets and oil prices built on a recovery from the aftermath of last week's Brexit vote as investors wagered central banks would ultimately ride to the rescue with more stimulus.

"We've moved from a kind of acute fear coming out of the vote to one where we have a pretty extended timeline" for an actual withdrawal, said Eric Theoret, a currency strategist at Bank of Nova Scotia.

The Canadian dollar CAD=D4 settled at C$1.2975 to the greenback, or 77.07 U.S. cents, stronger than Tuesday's close of C$1.3035, or 76.72 U.S. cents.

The currency's strongest level of the session was C$1.2942, while its weakest was C$1.3042.

It underperformed against the Australian and New Zealand dollars and the British pound, which had sunk after the vote.

Oil rose as traders moved money back into markets hit by the initial shock of Brexit, while a potential oil workers' strike in Norway and a crisis in Venezuela's oil sector also provided support. [O/R]

Expectations for the next Bank of Canada interest rate hike have been pushed back to the first quarter of 2018, according to a Reuters poll of primary dealers, who expect Britain's vote to leave the European Union to weigh on Canada's economy.   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