Canadian Dollar Strengthens After BoC Rate Hike
11 July 2018 - 8:54PM
RTTF2
The Canadian dollar drifted higher against its major opponents
in early New York deals on Wednesday, as the Bank of Canada raised
its benchmark rate by a quarter-point for a second time this
year.
The central bank raised its key rate to 1.50 percent from 1.25
percent. The decision was in line with expectations.
In a statement, the bank said that higher interest rates would
be necessary to keep inflation near target.
The consumer inflation is expected to edge up further to about
2.5 percent before settling back to 2 percent by the second half of
2019.
Meanwhile, global shares fell on concerns about the economic
impact of a global trade war after President Donald Trump's
administration proposed new tariffs on China.
Trump has ordered U.S. Trade Representative Robert Lighthizer to
begin the process of imposing tariffs of 10 percent on an
additional $200 billion of Chinese imports.
Oil prices fell after the API's weekly report showed U.S. crude
oil stocks fell 6.8 million barrels.
Crude for August delivery fell $0.75 to $73.36 per barrel.
The currency was higher against its major counterparts in the
European session, with the exception of the euro.
The loonie climbed to a 4-week high of 85.16 against the yen,
from a 5-day low of 84.21 seen at 9:00 pm ET. The next possible
resistance for the loonie is seen around the 87.00 level.
The loonie strengthened to near a 4-week high of 1.3064 against
the greenback, reversing from an early 8-day low of 1.3174. The
loonie is likely to find resistance around the 1.29 level.
Data from the Labor Department showed that U.S. producer prices
increased slightly more than expected in the month of June.
The Labor Department said its producer price index for final
demand rose by 0.3 percent in June after climbing by 0.5 percent in
May. Economists had expected prices to edge up by 0.2 percent. The
loonie advanced to a 6-day high of 1.5342 against the euro, after
having dropped to a 5-day low of 1.5442 at 9:15 am ET. The loonie
is seen finding resistance around the 1.52 level.
The loonie reversed from an early low of 0.9780 against the
aussie, rising to a 6-day high of 0.9688. If the loonie continues
its rise, 87.00 is possibly seen as its next resistance level.
The latest survey from Westpac Bank showed that consumer
confidence in Australia bounced higher in July. The bank's index
surged 3.9 percent this month to a score of 106.1. That follows the
0.3 percent gain in June to a reading of 102.1.
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