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Canadian dollar rises, traders look to major Fed meeting for rate hike hints

Canadian Press DataFile
By

TORONTO - 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 .

"Historically, Jackson Hole has proven market moving making it traders' core focus this week," said Camilla Sutton , chief FX strategist, managing director Scotiabank global banking and markets.

Inflation plays a big part in when rates will start to head higher and traders will also consider the latest reading on the U.S. consumer price index on Tuesday. Economists looked for inflation during July to come in at an annualized rate of two per cent.

In Canada , June retail sales figures and July consumer prices index data come out Friday.

Economists expect retail sales to rise 0.4 per cent over the previous month. The CPI is forecast to dip 0.1 per cent from the previous month, which would push the annual inflation rate to 1.8 per cent.

Prices were mainly lower on commodity markets where September crude dropped 90 cents to US$96.45 a barrel, September copper was unchanged at $3.10 a pound while lessening geopolitical tensions pushed December bullion down $5 to US$1,301.20 an ounce.

© 2014 The Canadian Press. All rights reserved.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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