The Canadian dollar was lower Wednesday while the greenback appreciated slightly ahead of the mid-afternoon release of the minutes from last month’s interest rate meeting by the U.S. Federal Reserve.
The loonie slipped 0.1 of a cent to 91.46 cents US after running ahead 0.39 of a cent on Tuesday.
“Today is all about the (Fed) minutes, the first meeting under the stewardship of Fed Chair Yellen,” observed Ian Pollick, senior fixed income strategist at RBC Dominion Securities.
Traders will look to the Fed minutes for insight about the possible timing of interest rate hikes. At the last meeting mid-March, the Fed further reduced its monthly asset purchase program by $10-billion to $55-billion. But it also changed its forward guidance by dropping the 6.5 per cent unemployment rate tightening threshold.
Instead, it will monitor a variety of labour market and inflation indicators. Yellen also surprised markets by saying that rate hikes could begin ‘around six months’ after the asset purchase program ends, which some took to mean as early as next spring. However, many analysts don’t expect the Fed to move on short term rates until mid-2015.