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Canadian dollar holds near three-week high on higher stocks, rate-hike betsFriday, July 06, 2018 > 11:16:50
Published on July 5, 2018
The Canadian dollar edged higher against its U.S. counterpart on Thursday, holding near its strongest in nearly three weeks, as stocks rose and investors braced for a potential interest rate hike next week from the Bank of Canada.
At 4 p.m. EDT, the Canadian dollar was trading 0.1 per cent higher at $1.3133 to the greenback, or 76.14 U.S. cents. The currency traded in a range of $1.3116 to $1.3161.
On Wednesday, the loonie touched its strongest since June 15 at $1.3113. It was boosted last week by domestic data showing business optimism and comments by Bank of Canada Governor Stephen Poloz that left the door open to an interest rate hike at the July 11 announcement.
“Those have swayed the market in a more hawkish direction,” said Alvise Marino, FX strategist at Credit Suisse in New York.
Money markets see about a 70 per cent chance of a rate hike next week.
“We have seen slightly more risk-on price action which is probably also helping (the loonie) a little bit.” Marino said.
U.S. stocks rose as reports suggested that the United States could walk back threatened tariffs on European cars if the European Union scrapped duties on U.S. cars in return.
Canada runs a current account deficit so its economy could be hurt if the flow of trade or capital slows.
The country has its own trade dispute with the United States and is contending with slow-moving talks to revamp the North American Free Trade Agreement, while U.S. President Donald Trump has threatened to impose tariffs on Canada’s autos.
The U.S. dollar fell against a basket of major currencies as strong German industrial orders and hopes over a softening in U.S. trade stance boosted the euro.