Loonie Bounces from Two-Week Low Amid Fed Rate Anticipation

The Canadian dollar rebounded from its two-week low on Tuesday, but its gains were limited due to falling oil prices and anticipation of an interest rate decision by the Federal Reserve.

The loonie strengthened against the US dollar by 0.2% to 1.41 per dollar or 70.92 US cents after touching its weakest level since July 14 at 1.4128.

According to Scotiabank strategists Shaun Osborne and Eric Theoret, a Fed hold tomorrow may allow the CAD to improve slightly but the scope for improvement is limited absent a significant narrowing in rate differentials, which they do not expect to develop until later this year.