Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

C$ rebounds as Wall Street rallies, BoC signals more tightening

Published 09/07/2022, 11:19 AM
Updated 09/07/2022, 03:56 PM
© Reuters. 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/File Photo

© Reuters. 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/File Photo

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Wednesday, with the currency rebounding from its lowest level in nearly eight weeks as investor sentiment picked up and the Bank of Canada raised interest rates to a 14-year high.

The loonie was trading 0.1% higher at 1.3135 to the greenback, or 76.13 U.S. cents, after earlier touching its weakest since July 14 at 1.3208.

"We're seeing a strong bounce in the Canadian dollar today, not so much because of the expected 75 bp rate hike from the Bank of Canada, but because of broad USD selling on the back of a constructive risk backdrop," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.

U.S. stock indexes climbed following a recent selloff as bond yields eased. In contrast, the price of oil fell to its lowest level since Russia's Feb. 24 invasion of Ukraine, settling 5.7% lower at $81.94 a barrel.

Oil is one of Canada's major exports.

The BoC hiked its benchmark rate by three-quarters of a percentage point to 3.25%, as expected, and signaled its most aggressive tightening campaign in decades was not yet done as it battles to tame inflation.

Money markets expect about 50 basis points of additional tightening by the end of 2022..

© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the

"It does feel as though the bank is preparing the market for the possibility that rates will need to keep moving higher for more than one or two more meetings," said Andrew Kelvin, chief Canada strategist at TD Securities.

Canadian bond yields eased across a flatter curve, tracking the move in U.S. Treasuries. The 10-year was down 7.7 basis points at 3.122%, after touching on Tuesday its highest intraday level in nearly two months at 3.244%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.