Canadian dollar hits 2-week high as Fed stance bolsters sentiment



* Canadian dollar strengthens 0.5% against the greenback

* Loonie touches its strongest level since July 14 at 1.2451

* Price of U.S. oil increases 0.7%

* Canadian bond yields rise across a steeper curve

By Fergal Smith

TORONTO, July 29 (Reuters) - The Canadian dollar touched a two-week high against its broadly weaker U.S. counterpart on Thursday, as the Federal Reserve remained patient about reducing stimulus and the Bank of Canada reassured Canadians it would keep inflation under control.

The U.S. dollar .DXY slipped to a one-month low against a basket of major currencies after the U.S. Fed's reassurance that interest rate hikes remain distant.

"The Fed continued to support markets yesterday with upbeat talk on the economy but not committing to cutting stimulus in the near term," Colin Cieszynski, chief market strategist at SIA Wealth Management, said in a note.

Canada sends about 75% of its exports to the United States including oil. Oil prices rose as crude stockpiles in the United States, the world's top oil consumer, fell to their lowest since January 2020.

U.S. crude CLc1 prices were up 0.7% at $72.87 a barrel, while the Canadian dollar CAD= gained 0.5% to 1.2469 per greenback, or 80.20 U.S. cents. It touched its strongest intraday level since July 14 at 1.2451.

Bank of Canada Governor Tiff Macklem, writing in a column for the Financial Post newspaper, said Canadians can be confident that the cost of living will not rise out of control as the economy reopens from the COVID-19 pandemic.

Data on Wednesday showed that Canada's inflation rate slowed to 3.1% in June from a decade-high 3.6% in May, but more price increases could be coming as businesses shuttered during the COVID-19 pandemic reopen and consumers dip into record savings.

Canadian government bond yields were higher across a steeper curve, with the 10-year CA10YT=RR up 3.6 basis points at 1.206%.
Reporting by Fergal Smith; Editing by Susan Fenton

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.