C$ resilient to oil fall as Fed weighs on greenback

Thu Jul 28, 2016 5:15pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar firmed against the greenback on Thursday as its U.S. counterpart was pressured after the Federal Reserve stopped short of signaling an imminent U.S. interest rate hike, while investors eyed domestic economic data due on Friday.

The loonie, as the Canadian currency is colloquially known, has held relatively firm against the falling price of oil, a major Canadian export, this week as currency markets focus on global central bank moves.

"Despite oil moving down and while we're awaiting GDP data tomorrow that will be significantly negative, the market is not pricing in any sort of move by the Bank of Canada, that's very unusual," said Jimmy Jean, an economic strategist at Desjardins.

The Canadian dollar CAD=D4 settled at C$1.3161 to the greenback, or 75.98 U.S. cents, stronger than the Bank of Canada's official Wednesday close of C$1.3191, or 75.81 U.S. cents.

The currency's strongest level of the session was C$1.3101, while its weakest was C$1.3193.

The U.S. central bank left interest rates unchanged on Wednesday and said the near-term risks to the U.S. economic outlook had diminished. While that opened the door to another rate hike, the Fed gave no firm indication it would do so at its next meeting in September. The U.S. dollar was off 0.4 percent against a basket of currencies .DXY.

The Japanese yen JPY= eased after Reuters reported the Bank of Japan was considering expanding monetary stimulus under pressure from the government to address signs of weak inflation.

Desjardins' Jean said any easing move from the Bank of Japan would likely push the U.S. dollar higher, leading to Canadian dollar weakness.   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