TORONTO: The Canadian dollar retreated on Thursday from an earlier fresh two-week high against its US counterpart as a rally triggered by the Federal Reserve's outlook for interest rate hikes faded.
On Wednesday, the loonie rallied the most in a year as the Fed raised interest rates as expected but central bank officials stuck to their outlook for two more rate hikes this year and three in 2018, a more gradual path than some investors had expected.
Markets are underestimating prospects of Fed rate hikes, he added.
The Canadian dollar ended at C$1.3347 to the greenback, or 74.92 US cents, weaker than Wednesday's close of C$1.3307, or 75.15 US cents.
The currency's weakest level of the session was C$1.3351, while it touched its strongest since Feb. 28 at C$1.3277.
US crude prices settled 11 cents lower at $48.75 a barrel, pressured by near record-high levels of US crude inventories.
Oil is one of Canada's major exports.
Foreign investment in Canadian securities dropped to its lowest in more than a year in January, as nonresidents bought bonds while selling stocks and money market paper, Statistics Canada said.
Canadian government bond prices were lower across a steeper yield curve, with the two-year down 2.5 Canadian cents to yield 0.818 percent and the 10-year falling 34 Canadian cents to yield 1.803 percent.
Yields dropped on Wednesday after the Fed did not flag an accelerated pace of monetary tightening.
Canadian manufacturing sales data is due on Friday. Sales are expected to have decreased by 0.2 percent in January after rising for the previous two months.
Comments
Comments are closed for this article.