TORONTO: The Canadian dollar firmed against the greenback on Tuesday, recovering from a nearly four-month low hit in the overnight session as a dearth of domestic economic data left the loonie drifting.
The low had brought the currency within a hair of the psychologically important C$1.10 level, which investors see as a key resistance threshold.
The failure to pierce that level is not very encouraging for the US dollar-Canadian dollar bulls from a technical perspective, said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.
"The more important piece is it likely only takes a small piece of broad US dollar strength to drive US dollar-Canadian higher through that very important C$1.10," she said.
"I suspect US dollar-Canadian dollar actually proves very comfortable on either side of that level."
The Canadian dollar was at C$1.0962 to the greenback, or 91.22 US cents, stronger than Monday's close of C$1.0981, or 91.07 US cents.
The loonie hit a low of C$1.0998 in overnight trading. The last time the currency pairing was higher than C$1.10 was in early May.
There is little on the economic calendar for Canada this week until gross domestic product figures are released on Friday. The Canadian economy slowed in the first three months of the year, partly due to a severe winter, and economists are looking for a bounce back in the second quarter.
The market is also focused on the possible path of monetary policy ahead of an upcoming Bank of Canada interest rate decision and following comments from Governor Stephen Poloz at last week's conference in Jackson Hole, Wyoming.
Poloz said the central bank will not necessarily immediately follow the United States when the Fed starts hiking rates, the Globe and Mail reported. The Bank of Canada will release its next policy statement on Sept. 3.
"The domestic side has improved materially, yet Poloz is clearly still neutral but leaning toward a more dovish side, favoring growth over inflation," said Sutton.
Canadian government bond prices were mostly higher across the maturity curve, though the two-year was off 0.3 Canadian cents to yield 1.091 percent. The benchmark 10-year was up 4 Canadian cents to yield 2.039 percent.
Comments
Comments are closed for this article.