Canadian dollar and business outlook

By Phil Franz-Warkentin

Glacier FarmMedia MarketsFarm – The Canadian dollar was firmer Monday morning, as gains in crude oil provided some underlying support and investors adjusted positions ahead of the Bank of Canada’s upcoming policy announcement.

At 9:00 a.m. CST the Canadian dollar was trading at US$0.7440 or US$1=C$1.3441, which compares with Friday’s close of US$0.7428 or US$1=C$1.3462.

The Bank of Canada is set to make its next interest rate decision on Wednesday, with most market watchers expecting the central bank will hold its key overnight rate unchanged after inflation edged up in December. The rate currently sits at a 22-year high of 5.0 per cent, with economists now generally penciling in a rate cut by June.

Crude oil was underpinned by the ongoing geopolitical unrest in the Middle East and Black Sea region, with West Texas Intermediate crude oil up by 1.38 per cent at US$74.42 per barrel.

The TSX strengthened in early trade, rising by 51.10 points at 9:00 CST, trading at 20,957.62 points.