TORONTO — The Canadian dollar edged higher
against its US counterpart on Wednesday, recovering from its
lowest level in nearly a week, as equity markets rallied after
the US Federal Reserve released minutes of its latest policy
The loonie was trading 0.1% higher at 1.2805 to the
greenback, or 78.09 US cents, after touching its weakest
intraday level since last Thursday at 1.2884.
“The bulk of the Canadian dollar rally has come from the
equity market reaction post-FOMC minutes,” said Erik Bregar,
director, FX & precious metals risk management at Silver Gold
Wall Street rose after the Fed minutes showed policymakers
were unanimous in their sentiment that the US economy was very
strong as they grapped with how to rein in inflation without
triggering a recession.
“As soon we see some dovish tilt out of the Fed we could see
(interest) rates fall and stocks rally,” Bregar added.
Canada is a major producer of commodities, including oil. So
the loonie tends to be sensitive to the signal that stocks send
about the economic outlook.
US crude oil futures settled 0.5% higher at $110.33
a barrel, buoyed by tight supplies, while the US dollar
snapped a two-day losing streak against a basket of major
Meanwhile, the Biden administration said it was requesting
that a second dispute settlement panel under the
US-Mexico-Canada Agreement (USMCA) be formed to review a trade
dispute with Canada over dairy import quotas.
Canadian government bond yields were lower across the curve,
tracking the move in US Treasuries. The 10-year
touched its lowest since April 27 at 2.743% before recovering to
2.769%, down 4.1 basis points on the day.
(Reporting by Fergal Smith; editing by Jonathan Oatis and David