52m ago
TORONTO (Reuters) - The Canadian dollar strengthened against its U.S.
counterpart on Wednesday as oil prices rose, but the move was limited as
investors braced for another oversized interest rate hike by the Federal
Reserve.
The price of oil, one of Canada's major exports, climbed as a report of lower
inventories in the United States and cuts in Russian gas flows to Europe
offset concern about weaker demand and a looming U.S. rate hike.
U.S. crude prices were up 0.7% at $95.66 a barrel.
Investors widely expect the Fed to increase interest rates by another
75 basis points later on Wednesday, with focus likely to shift to how deeply
signs of an economic slowdown have registered with the central bank's
policymakers.
Investors are anticipating that rapid tightening by the Fed and the Bank of
Canada will hurt economic growth. Both the U.S. and Canadian yield curves
have inverted in recent weeks, sending a potential signal of recession risk
ahead.
Canada's GDP data for May, which is due to be released on Friday, could
offer clues on the strength of the domestic economy.
The Canadian dollar was trading 0.1% higher at 1.2867 to the greenback,
or 77.72 U.S. cents, after trading in a range of 1.2848 to 1.2893.
The loonie's modest gain came as upbeat quarterly reports from Microsoft
and Alphabet lifted sentiment on Wall Street.
The Canadian 10-year yield eased 5.6 basis points to 2.769%, trading
about 34 basis points below the Canadian 2-year yield.
(Reporting by Fergal Smith; Editing by Paul Simao)