CANADA’S FX DEBT – Canadian dollar hits 12-day low ahead of interest rate decision

    * Canadian dollar dips 0.1% against greenback
    * Touches weakest level since Aug. 27 at 1.2706
    * Price of U.S. oil rises 1.5%
    * Canadian bond yields ease across flatter curve

    By Fergal Smith
    TORONTO, Sept 8 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Wednesday, adding to sharp
losses the day before, as the greenback broadly climbed and
investors expected the Bank of Canada to recognize recent weak
economic data.
    The loonie        was trading 0.1% lower at 1.2661 to the
greenback, or 78.98 U.S. cents, after touching its weakest
intraday level since Aug. 27 at 1.2706. On Tuesday, the loonie
was the weakest performer among G10 currencies, declining 0.9%.
    The Bank of Canada is due to make an interest rate decision
at 10 a.m. EDT (1400 GMT).
    The central bank is expected to keep interest rates on hold
at a record low of 0.25%, but investors are mindful that the
central bank could turn more cautious in its assessment of the
economy after data showed Canada's GDP unexpectedly fell in the
second quarter.                             
    The data has "thrown increased attention on the meeting," 
Adam Cole, chief currency strategist at RBC Europe Limited, said
in a note. "The central bank will need to acknowledge the weaker
    Weaker growth could imply the economy will take longer to
return to full capacity. The central bank has pledged to keep
interest rates on hold until economic slack is absorbed, which
its latest forecast shows would occur in the second half of
    The U.S. dollar        rose to its highest level in a week
against a basket of major currencies, while production outages
in the U.S. Gulf of Mexico after Hurricane Ida helped support
the price of oil, one of Canada's major exports.
    U.S. crude        prices were up 1.5% at $69.34 a barrel.
    Canadian government bond yields were lower across a flatter
curve, tracking the move in U.S. Treasuries. The 10-year yield
            eased 2.2 basis points to 1.21%.

 (Reporting by Fergal Smith
Editing by Paul Simao)

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