Loonie pulls back from three-month high

TORONTO — The Canadian dollar edged lower against its U.S. counterpart on Wednesday as oil prices fell and ahead of an interest rate decision by the Bank of Canada, with the loonie pulling back from its highest in nearly three months.

The price of oil, one of Canada’s major exports, was pressured by doubts that an early meeting of OPEC and its allies to extend existing output cuts will take place. U.S. crude prices were down 0.5 percent at $36.64 a barrel.

The Bank of Canada will hold interest rates at a record low of 0.25 per cent until at least the end of next year as the economy reels from the coronavirus crisis, according to nearly every economist polled by Reuters.

The interest rate decision was expected to come Wednesday and will be the first with Tiff Macklem as governor of the central bank. He began his seven-year term yesterday.

Canadian labour productivity rose 3.4 per cent in the first quarter, the largest quarterly increase recorded, as hours worked fell faster than business output, Statistics Canada said.

The Canadian dollar was trading 0.1 per cent lower at 1.3526 to the greenback, or 73.93 U.S. cents. The currency touched its strongest intraday level since March 9 at 1.3476.

The loonie has rallied since hitting a four-year low in March as investors grew more optimistic about a global economic recovery. World shares reached three-month highs on Wednesday as a closely watched survey of service sector activity in China recovered to pre-epidemic levels in May.