* Canadian dollar gains 0.3% against the greenback* Price of U.S. oil settles 0.8% higher* 10-year yield hits a three-month low
* Canadian dollar gains 0.3% against the greenback
* Price of U.S. oil settles 0.8% higher
* 10-year yield hits a three-month low
TORONTO, June 12 (Reuters) – The Canadian dollar gave
back some earlier gains against its U.S. counterpart on
Wednesday as the Federal Reserve signaled a reduced number of
interest rate cuts this year despite evidence of cooling
inflation.
The loonie was trading 0.3% higher at 1.3710 per U.S.
dollar, or 72.94 U.S. cents, after trading in a range of 1.3681
to 1.3760.
The Fed held rates steady
, as expected, with officials projecting only a single
quarter-percentage-point reduction for the year compared to
three previously.
“Treasury yields are partially reversing this morning’s
declines, and the (U.S.) dollar is inching higher, suggesting
that market participants are viewing the (rate) decision through
a very modestly-hawkish lens,” Karl Schamotta, chief market
strategist at Corpay, said in a note.
Earlier on Wednesday, data showed U.S. consumer prices
cooling more than expected in May, pressuring the greenback
against a basket of major currencies.
“For Canada, lower global inflation gives central banks
an opportunity to cut rates and stimulate growth which should
translate directly into Canadian resources,” said Adam Button,
chief currency analyst at ForexLive.
“The Canadian dollar is a pro-cyclical currency and rate
cuts should kick off a round of global growth in time.”
The price of oil, one of Canada’s major exports,
settled 0.8% higher at $78.50 a barrel, helped by forecasts that
global oil inventories would fall in the second half of 2024.
Bank of Canada Governor Tiff Macklem was due to participate
in a panel discussion on economic volatility. The central bank
will release Macklem’s prepared remarks at 3:15 p.m. ET (1915
GMT).
Canadian government bond yields fell across the curve,
tracking moves in U.S. Treasuries. The 10-year was
down 9.8 basis points at 3.382%, after earlier touching its
lowest level since March 12 at 3.354%.
(Reporting by Fergal Smith;
Editing by Alison Williams and Deepa Babington)
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