* Canadian dollar gains 0.2% against the greenback* For the week, the loonie was down 0.2%* Price of U.S. oil settles 0.8% higher* Canadian bond yield
* Canadian dollar gains 0.2% against the greenback
* For the week, the loonie was down 0.2%
* Price of U.S. oil settles 0.8% higher
* Canadian bond yields rise across the curve
TORONTO, Jan 26 (Reuters) – The Canadian dollar edged
higher against its U.S. counterpart on Friday but still posted a
weekly decline, with investors eyeing the Bank of Canada’s
recent shift in guidance to trigger a period of greater
volatility for the currency.
The loonie was trading 0.2% higher at 1.3450 to the
greenback, or 74.35 U.S. cents, after trading in a range of
1.3415 to 1.3483.
For the week, it was down 0.2% as the BoC said its focus is
shifting to when to cut borrowing costs rather than whether to
hike again.
“We can’t look past what we heard from the Bank of Canada
this week,” said Bipan Rai, global head of FX strategy at CIBC
Capital Markets.
“I do think the pivot they made, or at least the signal
being sent now that rates are restrictive enough should at the
margin introduce a little bit more two-way risk to the way the
Canadian dollar trades over the next couple of months, not least
as we look forward to the Federal Reserve next week.”
The market’s pricing of expected volatility for the Canadian
dollar has sunk to depressed levels, with three-month implied
volatility trading at an annualized rate of about
5.25%, nearly its lowest level since March 2020.
The Federal Reserve is due to make an interest rate decision
on Wednesday. U.S. prices rose marginally in December,
bolstering expectations the Fed will start cutting interest
rates this year.
In domestic data, a preliminary estimate showed wholesale
trade up 0.8% in December from November.
The price of oil, one of Canada’s major exports, settled
0.8% higher at $78.01 a barrel, while Canadian bond yields were
higher across the curve.
The 10-year rose as much as 6.9 basis points to
touch its highest level since Dec. 1 at 3.546%.
(Reporting by Fergal Smith; editing by Diane Craft)
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