Canadian dollar weakens as oil falls, Fed minutes eyed
By Alastair Sharp
TORONTO (Reuters) - The Canadian dollar on Tuesday reversed most of the gains it made against the greenback the previous day, as oil prices fell and investors boosted the U.S. currency on increased bets that the U.S. Federal Reserve will raise interest rates in December.
The Canadian dollar CAD=D4 settled at C$1.3241 to the greenback, or 75.52 U.S. cents, weaker than Monday's close of C$1.3175, or 75.90 U.S. cents, according to Reuters data.
Monday's gain was the loonie's biggest one-day rally since June, as oil surged and doubts grew over Republican presidential candidate Donald Trump's prospects to win the White House in the Nov. 8 election. Trump has said he would renegotiate or scrap the North American Free Trade Agreement if he is elected.
The loonie's official close on Friday was C$1.3285 to the greenback, or 75.27 U.S. cents. Monday was a market holiday in Canada.
"There's a risk aversion in the market," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. "I'm not sure whether it's anything more than position-squaring ahead of the Fed minutes tomorrow."
The U.S. dollar surged to a seven-month high against a major currency basket, and could push even higher if Wednesday's release of minutes from the Fed's latest monetary policy meeting confirms the market's December rate hike view.
Oil prices retreated from one-year highs after OPEC said it was trying to reach a global agreement to cap production for at least six months amid doubts about how much that would reduce a crude glut. [O/R]
The Canadian currency's strongest level of the session was C$1.3164, while its weakest was C$1.3274. Continued...