The Canadian dollar advanced Monday as geopolitical tensions ease and markets look to the U.S. Federal Reserve and economic data for hints as to the pace of interest rate hikes.
The loonie rose 0.07 of of a cent to 91.91 cents US.
Markets had ended last week in a nervous mood after Ukraine’s president said that his country’s forces destroyed a Russian armoured force that had crossed the border. But there was no escalation during the weekend and traders perceived an easing in tensions in the conflict after foreign ministers from both countries held discussions over the weekend in Berlin .
Russia’s Sergey Lavrov said Monday that all questions regarding a humanitarian mission from his country had been answered and that an agreement had been reached with Ukraine and the International Red Cross . There have been worries that the convoy of about 300 vehicles could be used to spirit in weapons for the separatists, who are gradually losing ground to Ukrainian forces.
Meanwhile, traders looked to the U.S. Federal Reserve for hints about when the central bank might move next year to hike short term interest rates from near zero. The Fed releases the minutes from its latest meeting on Wednesday. There could be a more hawkish tone in those minutes given the recent de-emphasis on disinflation in the news release from that meeting.
But traders in particular looked to Friday when Fed chair Janet Yellen delivers the keynote speech at the central bank’s annual meeting in Jackson Hole, Wyoming .