The Canadian Dollar, known to FX traders as the Loonie, inched higher to a 1-week peak after the latest minutes from the Federal Reserve Bank weighed on the US Dollar. A rise in oil prices also helped provide support for the Loonie; the Canadian Dollar is a key exporter of oil to the US and its economy tends to rely on the price of oil. For three consecutive days the price of oil has been edging higher, largely on the latest forecast from OPEC which calls for higher demand next year. Increasing tensions in Kurdistan have also helped to boost oil prices.
As reported at 10:12 am (JST) in Tokyo, the USD/CAD pair was trading at C$1.2453, a decline of 0.02%; the pair has ranged from a low of C$1.24930 to a peak of C$1.24580. Other commodity linked currencies are also faring well, with the AUD/USD at $0.7806, a gain of 0.23% and the NZD/USD at $07093, a rise of 0.15%.
Central Bank Policies Diverge
In the US, the Fed stressed concern for the inflation outlook and is taking a cautious stance in terms of a rate hike until such time as more inflation data is available. The Fed has a dual mandate of full employment and price stability, and the Fed’s target remains elusive. Unlike the Federal Reserve, the Bank of Canada has pushed through two rate increases over the past three months, believing that its projections are on target and that inflation will hit the BOC target by mid-2018.