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Canadian dollar hits 2-week high as Fed stance bolsters sentiment

07/29/2021 | 10:09am EDT
FILE PHOTO: A Canadian dollar coin, commonly known as the

TORONTO (Reuters) - The Canadian dollar touched a two-week high against its broadly weaker U.S. counterpart on Thursday, as the Federal Reserve remained patient about reducing stimulus and the Bank of Canada reassured Canadians it would keep inflation under control.

The U.S. dollar slipped to a one-month low against a basket of major currencies after the U.S. Fed's reassurance that interest rate hikes remain distant.

"The Fed continued to support markets yesterday with upbeat talk on the economy but not committing to cutting stimulus in the near term," Colin Cieszynski, chief market strategist at SIA Wealth Management, said in a note.

Canada sends about 75% of its exports to the United States including oil. Oil prices rose as crude stockpiles in the United States, the world's top oil consumer, fell to their lowest since January 2020.

U.S. crude prices were up 0.7% at $72.87 a barrel, while the Canadian dollar gained 0.5% to 1.2469 per greenback, or 80.20 U.S. cents. It touched its strongest intraday level since July 14 at 1.2451.

Bank of Canada Governor Tiff Macklem, writing in a column for the Financial Post newspaper, said Canadians can be confident that the cost of living will not rise out of control as the economy reopens from the COVID-19 pandemic.

Data on Wednesday showed that Canada's inflation rate slowed to 3.1% in June from a decade-high 3.6% in May, but more price increases could be coming as businesses shuttered during the COVID-19 pandemic reopen and consumers dip into record savings.

Canadian government bond yields were higher across a steeper curve, with the 10-year up 3.6 basis points at 1.206%.

(Reporting by Fergal Smith; Editing by Susan Fenton)

By Fergal Smith

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.68% 0.91759 Delayed Quote.-5.48%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) -0.51% 0.7258 Delayed Quote.-6.01%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) -0.42% 1.73004 Delayed Quote.0.17%
BRITISH POUND / US DOLLAR (GBP/USD) -0.37% 1.36698 Delayed Quote.-0.42%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.40% 87.477 Delayed Quote.5.88%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) -0.04% 0.72997 Delayed Quote.4.31%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.01% 0.7897 Delayed Quote.-0.40%
EURO / CANADIAN DOLLAR (EUR/CAD) -0.26% 1.48267 Delayed Quote.-3.82%
EURO / US DOLLAR (EUR/USD) -0.18% 1.1718 Delayed Quote.-4.31%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.01% 0.013548 Delayed Quote.-1.13%
LONDON BRENT OIL 0.94% 78.01 Delayed Quote.46.73%
NEW ZEALAND DOLLAR / CANADIAN DOLLAR (NZD/CAD) -0.79% 0.88734 Delayed Quote.-2.15%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.73% 0.7012 Delayed Quote.-2.64%
US DOLLAR / CANADIAN DOLLAR (USD/CAD) -0.05% 1.2652 Delayed Quote.0.46%
WTI 0.93% 73.961 Delayed Quote.49.32%
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