The Canadian dollar edged lower against its U.S. counterpart on Thursday, retreating from an earlier five-week high, as oil prices fell and attention turned to a speech by Bank of Canada Governor Tiff Macklem.
Macklem is due to give an economic progress report at 11:30 a.m. ET (1630 GMT), one day after the central bank hiked its key interest rate for the first time in more than three years.
“With inflation running hot, the BoC will likely signal a series of rate hikes in the coming meetings,” Priscilla Thiagamoorthy, an economist at BMO Capital Markets, said in a note.
Money markets expect five further hikes this year, which would lift the policy rate to the 1.75% level it stood at before the coronavirus crisis.
Analysts are also standing by for potential guidance from the BoC on shrinking its bloated balance sheet, a process known as quantitative tightening.
The Canadian dollar was trading 0.1% lower at 1.2636 to the greenback, or 79.14 U.S. cents, after notching its strongest intraday level since Jan. 26 at 1.2588.
The price of oil, one of Canada’s major exports, touched its loftiest since 2008 on disruption to Russian oil exports but then turned lower. U.S. crude prices were down 1.4% at $109.10 a barrel.
Canadian government bond yields were mixed across the curve following large moves over the previous two days. The 10-year eased about half a basis point to 1.813%.
(Reporting by Fergal Smith; Editing by Andrea Ricci)
