TORONTO – The Canadian dollar was lower Tuesday as the greenback appreciated sharply on rising interest rate concerns ahead of next week’s meeting of the U.S. Federal Reserve.
The loonie fell 0.53 of a U.S. cent to 78.86 cents.
The greenback hit multi-year highs against a variety of currencies amid increased speculation the U.S. Federal Reserve could move earlier than expected to start to raise interest rates from near zero, where they have been since the 2008 financial crisis.
The latest round of Fed nervousness started Friday with the release of a much better than expected U.S. jobs report for February. It picked up Monday night after Dallas Federal Reserve Bank president Richard Fisher said policy-makers should move sooner and slower rather than later and faster.
Markets could get more clarity on the Fed’s intentions when the central bank holds its interest rate meeting next week.
Meanwhile, the U.S. stronger dollar helped push the April crude contract in New York down $1.71 to US$48.29 a barrel. A stronger greenback makes U.S.-dollar denominated commodities more expensive for holders of other currencies.
Oil prices were also squeezed by an upwards revision to U.S. crude oil production and signs the Organization of Petroleum Exporting Countries will maintain production at current levels.
The U.S. Energy Information Agency said on Tuesday it expects total oil production in 2015 to be 9.35 million barrels per day, slightly higher than the 9.3 million figure in last month’s short-term energy outlook.
Prices have plunged 50 per cent since last summer amid a huge glut of supply. They’re down about 40 per cent just since the end of November after OPEC opted to keep production levels unchanged. Qatar’s former energy minister says the cartel is now expected to hold firm on oil production policy at its next meeting in June unless non-OPEC members agree to reduce output.
May copper fell five cents to US$2.62 a pound. April gold faded $6.40 to US$1,160.10 an ounce.
The major North American reports this week are U.S. retail sales for February, which are out Thursday, and the Canadian jobs report for February, that Statistics Canada will release Friday.