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Canadian dollar gains 0.4% against the greenback
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Canadian new home prices fall 0.2% in February
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Price of U.S. oil settles 1.8% higher
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Canadian bond yields tumble across curve
(Adds analyst quote and details throughout; updates prices)
By Fergal Smith
TORONTO, March 22 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Wednesday as
investors cheered a signal by the Federal Reserve that it is
nearing a pause in its tightening campaign.
The Canadian dollar was trading 0.4% higher at 1.3660
to the greenback, or 73.21 U.S. cents, approaching its strongest
level in recent weeks.
"The Fed is clearly doing its best to put on a brave face by
raising rates and sticking with quantitative tightening," Royce
Mendes, head of macro strategy at Desjardins, said in a note.
"But the accompanying statement leaves the door open to
further stress in the financial system ending this rate hiking
cycle prematurely."
Wall Street rallied and the U.S. dollar fell against
a basket of major currencies, as the Fed raised interest rates
by a quarter of a percentage point but indicated it was on the
verge of pausing further increases in borrowing costs amid
recent turmoil in financial markets.
The Bank of Canada moved to the sidelines at a policy
decision earlier this month. Minutes from that meeting showed
that the central bank was concerned about inflation sticking
above its 2% target and agreed there might be a need to tighten
monetary policy further.
Since then, money markets have shifted from expecting
another rate hike to pricing in rate cuts over the coming
months. In domestic data, new home prices fell 0.2% month-over-month
in February following a similar decrease in January as the rapid
increase in mortgage rates over the last year slowed housing
demand.
The price of oil , one of Canada's major exports, settled 1.8% higher at $70.90 a barrel, helped by a weaker U.S. dollar. Canadian government bond yields tumbled across the curve, tracking the move in U.S. Treasuries. The 10-year was down 16.7 basis points at 2.726%. (Reporting by Fergal Smith; editing by Jonathan Oatis)
