Loonie Bounces Back Ahead of Fed Decision

The Canadian dollar rebounded from its two-week low on Tuesday, but gains were limited as oil prices fell and investors awaited the Federal Reserve's interest rate decision.

The loonie traded 0.2% higher at 1.41 per U.S. dollar, or 70.92 U.S. cents, after earlier touching its weakest level since July 14 at 1.4128.

Analysts believe the bar for a Fed interest rate hike is higher than reflected in rate futures markets due to cooler-than-expected inflation data and a lull in hostilities between the U.S. and Iran.