Canadian dollar near 13-month highs after BoC rate hike
The Canadian dollar was touch lower against its U.S. counterpart on Thursday but was still close to 13-month highs after its country’s central bank hiked interest rates on Wednesday.
USD/CAD edged up 0.09% to 1.2761 by 09.30 AM ET, not far from the low of 1.2679 set on Wednesday, which was the weakest since June 2016.
The Bank of Canada raised interest rates for the first time in almost seven years on Wednesday, making it the first major central bank to join the Fed in tightening monetary policy.
The BoC said the economy no longer needed as much stimulus and added that policymakers would look to the data to decide when they can hike again.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.59, not far from the nine-month low of 95.22 plumbed in late June, following dovish sounding comments from Federal Reserve Chair Janet Yellen.
In testimony before Congress on Wednesday, Yellen said the economy is on a strong enough footing for the Fed to raise rates and begin winding down its massive bond portfolio.
She also emphasized that inflation is below target and noted that it is a particular “uncertainty” that could affect monetary policy.
Investors were looking ahead to Friday’s U.S. inflation figures for June for their potential impact on Fed policy.
Data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell last week for the first time in a month.
Initial jobless claims fell to 247,000 last week, from 250,000, indicating that the labor market remains robust.
A separate report showed that U.S. producer prices unexpectedly rose in June.
Signs of strength in the labor market and an uptick in inflation could help reinforce expectations for a third rate hike by the Fed this year.
In Canada, data on Thursday showed that new house prices rose more than expected in May, led by gains in Toronto, the country’s largest city and Vancouver.