(Adds analyst quote and details throughout; updates prices) * Canadian dollar gains 0.5% against the greenback
(Adds analyst quote and details throughout; updates prices)
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Canadian dollar gains 0.5% against the greenback
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Price of U.S. oil settles 0.8% lower
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Canadian bond yields rise across curve
TORONTO, Dec 8 (Reuters) – The Canadian dollar
strengthened against its U.S. counterpart on Thursday as
investors bet that a decline in oil prices, a key driver of
inflation, would make it more likely that the Federal Reserve
scales back its cycle of interest rate hikes.
The loonie was trading 0.5% higher at 1.3580 to the
greenback, or 73.64 U.S. cents, recovering some ground after it
touched on Wednesday its weakest level in more than a month at
1.3699.
“Oil has taken another turn lower but markets have looked at
it and decided that lower oil might actually be good for the
loonie because the Fed will hike less and that’s good for risk
appetite,” said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets.
U.S. crude oil futures fell to their lowest level
this year, settling down 0.8% at $71.46 a barrel, but Wall
Street rebounded as a rise in U.S. weekly jobless claims
supported expectations for the pace of rate hikes to soon slow.
The Bank of Canada will study the latest economic data to
gauge whether to raise interest rates further, Deputy Governor
Sharon Kozicki said, adding it would still move forcefully if
necessary.
On Wednesday, the BoC raised rates by half a percentage
point to 4.25%, the highest in nearly 15 years, and signaled
that its unprecedented tightening campaign was near an end.
Money markets see a roughly 35% chance that the central bank
will hike by 25 basis points at its next policy meeting on
January 25.
Canadian government bond yields were higher across the
curve, tracking moves in U.S. Treasuries.
The 10-year rose 4.8 basis points to 2.808%,
after touching on Wednesday its lowest intraday level in nearly
four months at 2.715%.
(Reporting by Fergal Smith; editing by Jonathan Oatis and John
Stonestreet)
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