Canadian dollar pares losses as oil rises, Fed rate hike bets dip

Mon Sep 12, 2016 4:57pm EDT
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar pared some losses against the U.S. dollar on Monday, rebounding from an earlier 11-day low as oil rose and bets on a Federal Reserve interest rate hike were scaled back.

Growing concerns that global central banks' commitment to monetary policy stimulus may be waning have weighed on risk-sensitive assets and currencies, such as the Canadian dollar, over the past few days. But U.S stock prices rebounded on Monday after Fed policymakers expressed caution about the need to raise U.S. interest rates.

Those "dovish sounding comments" helped support the Canadian dollar, said Robert Kavcic, senior economist at BMO Capital Markets.

The probability of a Fed rate hike in September fell to 15 percent from 24 percent on Friday, according to CME Group's FedWatch tool.

U.S. crude oil futures CLc1 settled up 41 cents at $46.29 a barrel, helped by a softer U.S. dollar and stronger U.S. equity markets. [O/R]

Oil is one of Canada's major exports.

Canada is working towards signing a new trade agreement with the European Union in October, Canadian Trade Minister Chrystia Freeland told the Toronto Global Forum.

The Canadian dollar CAD=D4 ended at C$1.3049 to the greenback, or 76.63 U.S. cents, slightly weaker than Friday's close of C$1.3037, or 76.70 U.S. cents.   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