The Canadian dollar drifted higher against its major opponents in early New York deals on Wednesday, as the Bank of Canada raised its benchmark rate by a quarter-point for a second time this year.
The central bank raised its key rate to 1.50 percent from 1.25 percent. The decision was in line with expectations.
In a statement, the bank said that higher interest rates would be necessary to keep inflation near target.
The consumer inflation is expected to edge up further to about 2.5 percent before settling back to 2 percent by the second half of 2019.
Meanwhile, global shares fell on concerns about the economic impact of a global trade war after President Donald Trump’s administration proposed new tariffs on China.
Trump has ordered U.S. Trade Representative Robert Lighthizer to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports.
Oil prices fell after the API’s weekly report showed U.S. crude oil stocks fell 6.8 million barrels.
Crude for August delivery fell $0.75 to $73.36 per barrel.
The currency was higher against its major counterparts in the European session, with the exception of the euro.
The loonie climbed to a 4-week high of 85.16 against the yen, from a 5-day low of 84.21 seen at 9:00 pm ET. The next possible resistance for the loonie is seen around the 87.00 level.
The loonie strengthened to near a 4-week high of 1.3064 against the greenback, reversing from an early 8-day low of 1.3174. The loonie is likely to find resistance around the 1.29 level.
Data from the Labor Department showed that U.S. producer prices increased slightly more than expected in the month of June.
The Labor Department said its producer price index for final demand rose by 0.3 percent in June after climbing by 0.5 percent in May. Economists had expected prices to edge up by 0.2 percent.
The loonie advanced to a 6-day high of 1.5342 against the euro, after having dropped to a 5-day low of 1.5442 at 9:15 am ET. The loonie is seen finding resistance around the 1.52 level.
The loonie reversed from an early low of 0.9780 against the aussie, rising to a 6-day high of 0.9688. If the loonie continues its rise, 87.00 is possibly seen as its next resistance level.
The latest survey from Westpac Bank showed that consumer confidence in Australia bounced higher in July. The bank’s index surged 3.9 percent this month to a score of 106.1. That follows the 0.3 percent gain in June to a reading of 102.1.
The material has been provided by InstaForex Company – www.instaforex.com