Canadian dollar outperforms eight G10 currencies as investors await BoC rate decision
The Canadian dollar edged lower against its U.S. counterpart on Tuesday but was performing better than all the other Group of 10 currencies, as oil prices rose and investors awaited a Bank of Canada interest rate decision this week.
The loonie was trading 0.1 per cent lower at 1.3725 per U.S. dollar, or 72.86 U.S. cents, after trading in a range of 1.3702 to 1.3742.
All the other G10 currencies posted bigger declines as the U.S. dollar clawed back some of its recent broad-based losses.
'With the BoC meeting ahead, investors are watching Governor (Tiff) Macklem for signals on rate cuts,' said Kevin Ford, FX & macro strategist at Convera. 'Sticky core inflation and an OK Q1 GDP have tempered expectations for further easing.'
The Canadian central bank will hold its benchmark interest rate at 2.75 per cent on Wednesday as policymakers await further news on an economy that grew faster than expected last quarter, with at least two more cuts likely this year, according to a majority of economists in a Reuters poll.
Overnight index swaps are pricing in a roughly 75 per cent chance the BoC stays sidelined on Wednesday. The central bank left rates on hold in April for the first time since its easing campaign began in June last year.
The price of oil, one of Canada's major exports, rose as the war in Ukraine ramped up and Iran was set to reject a U.S. nuclear deal proposal. U.S. crude oil futures were trading 1.7 per cent higher at $63.58 a barrel.
Wildfires burning in Canada's oil-producing province of Alberta have affected more than 344,000 barrels per day of oil sands production, or about 7 per cent of the country's overall crude oil output, according to Reuters calculations.
Canadian bond yields rose across a steeper curve, with the 10-year up 4.4 basis points at 3.270 per cent.
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