The Canadian dollar edged higher against its U.S. counterpart on Wednesday, holding near a three-week high reached the day before as oil prices rose and minutes from the Federal Reserve’s latest meeting signalled patience on raising interest rates further.
At 4:12 p.m. (2012 GMT), the Canadian dollar was trading 0.1 per cent higher at 1.3318 to the greenback, or 75.09 U.S. cents. The currency, which on Tuesday touched its strongest intraday level since March 21 at 1.3285, traded in a range of 1.3306 to 1.3360.
The price of oil, one of Canada’s major exports, rose after U.S. data showing a deep decline in gasoline stocks overrode a rise in crude inventories to 17-month highs, and as an OPEC report showed further tightening of Venezuela’s crude supply.
U.S. crude oil futures settled nearly 1 per cent higher at $64.61 a barrel.
“Oil is still very strong yet the loonie can’t seem to get that extra bite in there … there’s some technical support (for the U.S. dollar) just below 1.33 which we think is holding the market in here,” said Amo Sahota, director at Klarity FX in San Francisco.
The loonie has advanced 2.4 per cent since the start of the year. But the currency has lost ground since February even as oil has pushed to a five-month high.
The U.S. dollar and euro were little changed on Wednesday as the Federal Reserve and the European Central Bank hinted they are willing to leave interest rates alone amid signs of flagging growth and risk from trade tensions.
Canada has its own trade conflicts, including a dispute with the United States over tariffs on exports of Canadian steel and aluminum. On Tuesday, Canadian Foreign Minister Chrystia Freeland said the government was looking at ways to boost the effectiveness of its retaliatory tariffs against the United States.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries after U.S. data showed a slowdown in underlying inflation.
The two-year rose 4.5 Canadian cents to yield 1.581 per cent and the 10-year climbed 37 Canadian cents to yield 1.687 per cent.