Canadian dollar little changed near 14-month lows
The Canadian dollar remained close to 14-month lows against its U.S. counterpart on Wednesday after the Federal Reserve left the door open to two more U.S. interest rate hikes this year.
USD/CAD was steady at 1.3732 by 09.51 ET. On Tuesday, the pair hit highs of 1.3757, the most since February 2016.
The loonie has fallen around 2% against the U.S. dollar so far this year, pressured lower by the diverging monetary policy stance between the Federal Reserve and the Bank of Canada.
Falling prices for oil, a major Canadian export have also weighed.
Another headwind is uncertainty over the future of the North American Free Trade Agreement, which binds Canada, the U.S. and Mexico.
The Fed concluded its two-day policy meeting Wednesday afternoon, giving a positive assessment of the U.S. economy while keeping rates unchanged, as was widely expected.
The Fed said it expects the economy to rebound after hitting a soft patch in the first three months of the year, noting that the labor market looks solid and inflation is running close to its target.
Canadian dollar today
The hawkish Fed statement indicated that policymakers think the recent weakness in the economy was temporary and that more rate hikes are coming this year.
The loonie found some support after data on Thursday showing that Canada’s trade deficit narrowed to C$135 million in March as exports surged.
At the same time, U.S. economic reports showed that initial jobless claims fell more than expected last week and the trade deficit narrowed slightly in March.
The Labor Department reported that the number of individuals filing for initial jobless benefits last week fell by 19,000 to 238,000 from the previous week’s total of 257,000, against expectations of a 10,000 decline.
The Commerce Department said the U.S. trade deficit shrank to $43.7 billion in March as both imports and exports declined.
Meanwhile, oil prices hit the lowest levels since November on Thursday amid renewed concerns over a global supply glut.
A rebound in U.S. shale production is threatening to derail efforts by other major producers to cut output in a bit to rebalance global oil supply and demand.