Canadian dollar hits record high; US dollar weaker on weather concerns; sterling mixed

Story link: Canadian dollar hits record high; US dollar weaker on weather concerns; sterling mixed

The US dollar was weaker on Wednesday on concerns that Hurricane Rita could lead to further economic disruption on top of that caused by Hurricane Katrina as well as further disruption to the US oil supply. Another spike in prices for crude oil and oil products did not help the dollar’s position, especially after the Federal Open Market Committee issued a warning that higher energy prices could lead to rising inflation.

The US dollar fell 1 percent to SFr1.2684 against the Swiss franc before recovering slightly to SFr1.2711, was down 0.9 percent to ¥110.98 in relation to the yen but recovered to ¥111.36 later, and was trading at $1.2211 versus the euro.

In the UK, notes of the Bank of England’s monetary policy committee showed that the vote earlier in the month to keep interest rates at their present level was unanimous. At least one analyst said that while the MPC’s growth forecasts are too optimistic, interest rates are not likely to be cut again as long as the committee is worried about inflation.

Sterling was up 0.6 percent to $1.8090 against the US dollar but fell 0.2 percent to £0.6747 versus the euro.

The Canadian dollar was helped by retail sales figures that were better than had been forecast as well as by increasing foreign demand for Canadian equities. The loonie reached a 14-year high of C$1.1644 in relation to the US dollar before it eased off to trade at C$1.1690 against the greenback.