TORONTO (Reuters) - The Canadian dollar climbed to a one-week high on Wednesday against its U.S. counterpart as oil rose and after minutes from the latest Federal Reserve meeting weighed on the greenback.
The U.S. dollar .DXY fell to a two-week low against a basket of currencies as several Fed officials expressed they would like more inflation data in the next few months when deciding on future rate hikes.
“It has been just a one-way direction for the U.S. dollar against all the majors,” said Eric Theoret, currency strategist at Scotiabank. “They (Fed policymakers) are willing to be patient to get the data that they need in order to hike”
In contrast, the Bank of Canada has raised rates twice since July, trusting its projections and betting that stronger growth will help push inflation to its target by the middle of next year.
Prices of oil, one of Canada’s major exports, rose for the third day as the Organization of the Petroleum Exporting Countries forecast higher demand for 2018 and heightened tensions in Kurdistan supported prices.
U.S. crude CLc1 prices settled 38 cents higher at $51.30 a barrel.
At 5 p.m. EDT (2100 GMT), the Canadian dollar CAD=D4 was trading at C$1.2460 to the greenback, or 80.26 U.S. cents, up 0.4 percent.
The currency’s weakest level of the session was C$1.2530, while it touched its strongest since Oct. 4 at C$1.2453.
U.S. President Donald Trump said he would be open to doing a bilateral trade deal with Canada but not Mexico if talks between the three countries over the North American Free Trade Agreement fall apart.
Canada sends about 75 percent of its exports to the United States. Its economy could suffer if NAFTA is abandoned.
Canadian government bond prices were mixed across a flatter yield curve, with the two-year CA2YT=RR down 0.5 Canadian cent to yield 1.552 percent and the 10-year CA10YT=RR rising 11 Canadian cents to yield 2.111 percent.
Reporting by Fergal Smith; Editing by Lisa Shumaker