Monday, July 4

Canadian dollar recovers from 6-day low as Wall Street rallies

Article content

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,

Article content

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