TORONTO, March 20 (Reuters) - The Canadian dollar strengthened to a six-day high against its U.S. counterpart on Wednesday as investors cheered the Federal Reserve's move to stick with its interest rate-cutting forecast for 2024.
The loonie was trading 0.5% higher at 1.35 to the U.S. dollar, or 74.07 U.S. cents, after touching its strongest intraday level since last Thursday at 1.3491.
The Fed held interest rates steady but policymakers indicated they still expect to reduce them by three 25-basis-point rate cuts by the end of 2024 despite stodgier expected progress towards the U.S. central bank's 2% inflation target.
"It looks like the market was braced for a more hawkish outcome," said Royce Mendes, managing director and head of macro strategy at Desjardins. "The risk was that the expected upward revisions to GDP and core inflation for 2024 could have prompted officials to move down to just two cuts for this year."
Wall Street rallied, while U.S. Treasury yields fell and the U.S. dollar (.DXY), opens new tab lost ground against a basket of major currencies.
The Bank of Canada also expects to ease this year, minutes from the central bank's policy meeting from earlier this month showed. But policymakers were divided over when there would likely be enough evidence that the conditions were right for cuts.
A decline in the price of oil, one of Canada's major exports, had little impact on the loonie. U.S. crude oil futures settled 2.1% lower at $81.68 a barrel, giving back some recent gains.
Canadian government yields fell across the curve, tracking moves in U.S. Treasuries. The 10-year was down 3.2 basis points at 3.492%, extending its pullback from the highest intraday level in one month at 3.624% on Tuesday.
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Reporting by Fergal Smith, Editing by Nick Zieminski
