Greenback trading strong against the loonie in early trade
Investing.com — The U.S. dollar rose to a two-week high against its Canadian counterpart on Thursday, supported by upbeat US data and news of a possible interest rate increase by the Federal Reserve until the end of the year, while lower oil prices squeezed demand for the commdity-related canadian currency.
USD/CAD up 0.20% at 1.2350 from 09:30 a.m. ET (13:30 GMT), the highest level since the 6.September.
The U.S. Department of labor reported on Thursday that the initial claims for unemployment benefits unexpectedly declined last week, 259,000.
A separate report showed that manufacturing activity in the Philadelphia-area increased unexpectedly in September.
As expected, the Fed interest rates will be left unchanged at the conclusion of its two-day monetary policy meeting on Wednesday.
However, the Central Bank hinted that further interest rate increase is likely this year, although it reduced the Outlook for inflation this year from 1.7% to 1.5% and from 2% to 1.9% in 2018.
The Fed also said it will be 4.5 trillion balance sheet will begin to relax $in October. The majority of the assets consist of Treasuries and mortgage-backed securities, the bank acquired under its quantitative-easing program.
In Canada, official data on Thursday that wholesale sales rose by 1.5% in July, compared with expectations for a 0.9% decline.
But the Canadian dollar, the gains were limited as oil prices turned lower after Wednesday’s disappointing U.S. crude oil inventories data and as traders remained cautious ahead of the much-anticipated meeting of the organization of petroleum Exporting countries on Friday.
The loonie was also lower against the euro, with EUR/CAD gaining 0.40% to 1.4713.