Daily Afternoon Report 06.03.2017
The Canadian dollar edged lower against its U.S. counterpart on Monday amid weakness in the price of oil, a major Canadian export and the diverging monetary policy outlook between the two countries’ central banks.
USD/CAD touched highs of 1.3415, not far from Friday’s two-month peaks of 1.3435 and was at 1.3385 by 09.22 ET.
Oil prices started the week in negative territory on Monday as concerns over rising production and swelling U.S. stockpiles weighed. Oil is one of Canada’s major exports.
The loonie, as the Canadian dollar is also known, hit two-month lows on Friday and ended the week down around 2% against the greenback, in its worst week performance since May 2016.
Federal Reserve Chair Janet Yellen said on Friday a rate hike “would likely be appropriate” this month if employment and inflation continued to evolve in line with expectations.
The remarks cemented the view that the Fed will raise interest rates at its next meeting on March 14-15.
Meanwhile, the Bank of Canada kept rates on hold last week, citing the “significant uncertainties” facing the economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.1% at 101.45.