TORONTO: The Canadian dollar edged lower against its U.S. counterpart on Wednesday, but holding on to much of the previous day’s gains, as investors weighed domestic manufacturing data and braced for an expected interest rate hike by the Federal Reserve.
The Canadian dollar was trading 0.1% lower at 1.3557 to the greenback, or 73.76 U.S. cents, after trading in a range of 1.3531 to 1.3579.
On Tuesday, the currency touched its strongest level since Dec. 5 at 1.3519 as U.S. data showed an easing of inflation pressures.
Fed officials have signaled in recent weeks that they would raise the benchmark overnight interest rate by half a percentage point at Wednesday’s policy decision, scaling back from four straight three-quarters-of-a-percentage-point increases, in an acknowledgement that rates were approaching the level needed to slow the economy and lower inflation.
Canadian factory sales rose by 2.8% in October from September on higher sales in petroleum and coal products, as well as food, but the entire increase was driven by higher prices, data from Statistics Canada showed.
The price of oil, one of Canada’s major exports, rose after OPEC and the International Energy Agency (IEA) both forecast a rebound in demand over the course of next year. U.S. crude prices were up nearly 2% at $76.86 a barrel.
Canadian government bond yields were lower across a steeper curve. The 2-year eased 5.3 basis points to 3.708%, while the 10-year was down 1.5 basis points at 2.830%.
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