Canadian dollar steadies near three-year high ahead of Fed meeting

Fergal Smith
·2 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday as the greenback broadly climbed ahead of a Federal Reserve meeting this week and oil prices fell, with the loonie pulling back from an earlier three-year high.

The loonie was trading nearly unchanged at 1.2466 to the greenback, or 80.22 U.S. cents, having touched its strongest intraday level since February 2018 at 1.2442.

The loonie was boosted on Friday by data showing that Canada added more jobs than expected in February.

"We do not exclude the risk of a squeeze higher in the USD in the short run and note that intraday price action today might well be hinting that a USD push higher is developing," strategists at Scotiabank, including Shaun Osborne, said in a note.

The U.S. dollar gained for a third straight session as traders cut their bearish bets on the greenback to four-month lows amid the recent rise in U.S. Treasury yields and grew cautious ahead of the Fed's policy decision on Wednesday.

The price of oil, one of Canada's major exports, consolidated some recent gains. U.S. crude prices settled 0.3% lower at $65.39 a barrel.

Canadian home sales and prices continued to surge in February, rising 6.6% from January to set a new record amid strong demand across much of the country, data from the Canadian Real Estate Association showed.

Canada's inflation report for February is due on Wednesday which can help guide expectations for the Bank of Canada interest rate outlook.

Canadian government bond yields were lower across a flatter curve. The 10-year touched its highest since January last year at 1.602% before dipping to 1.543%, down 4.8 basis points on the day.

(Reporting by Fergal Smith; Editing by Kirsten Donovan and Marguerita Choy)