Forex
Loonie Slips Ahead of Rate Decision Amid Fed Hike Expectations
The Canadian dollar experienced a decline of 0.4% on Tuesday to reach 1.3905 per US dollar, right before the Bank of Canada's rate decision.
This move was largely attributed to currency traders pricing in a higher chance of a Federal Reserve hike in September.
The gap between expected rates from the Fed and the Bank of Canada is significant because it makes dollar assets more attractive, pulling money towards the greenback and away from the loonie.
US crude rose 4.4% to $89.53 due to Middle East supply worries, which can also contribute to a 'risk-off' mode where investors prefer perceived safe havens like the US dollar.