June 9, 2020 / 1:55 PM / a month ago

Loonie dips as investors take some profits ahead of Fed decision

FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday as investors captured some recent gains for the currency ahead of an interest rate decision on Wednesday from the Federal Reserve.

The loonie was trading 0.2% lower at 1.3404 to the greenback, or 74.60 U.S. cents. The currency traded in a range of 1.3359 to 1.3487.

Still, the loonie, which on Monday notched a three-month high at 1.3352, has rallied more than 9% since March.

“It has been a marvelous run in the Canadian dollar and there is a little profit-taking today ahead of the FOMC and with equity markets declining,” said Rahim Madhavji, president at KnightsbridgeFX.com.

U.S. stocks fell after recent strong gains, while the U.S. dollar slumped to a near three-month low against a basket of major currencies as investors weighed prospects of additional easing steps from the Fed, such as yield-curve control, or the targeting of longer-term interest rates.

The price of oil, one of Canada’s major exports, turned higher, helped by recent commitments from major oil producers to curb production. U.S. crude oil futures settled nearly 2% higher at $38.94 a barrel.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries.

The 10-year yield was down 3 basis points at 0.648%. On Friday, it touched its highest intraday level since mid-April at 0.768%.

Reporting by Fergal Smith; Editing by Paul Simao and Marguerita Choy

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