TORONTO: The Canadian dollar fell on Wednesday to its lowest in more than three weeks against its US counterpart, as the greenback added to recent gains against a basket of major currencies.
At 4 p.m. EDT (2000 GMT), the Canadian dollar was trading 0.1 percent lower at C$1.2846 to the greenback, or 77.85 US cents. The currency touched its weakest level since April 3 at C$1.2897.
“It has mostly been a US dollar story,” said Mark Chandler, head of Canadian fixed income and currency strategy. “It is getting some support finally from having US yields rise.”
The greenback
notched a four-month high as benchmark US Treasury yields climbed further above 3 percent.
Improved prospects for a deal to revamp the North American Free Trade Agreement have supported the loonie but have been offset by some recent soft domestic data and last week’s interest rate announcement by the Bank of Canada, Chandler said.
The loonie has declined 2.3 percent after the central bank held its benchmark interest rate steady at 1.25 percent and said it did not know when or how aggressive it would need to be to keep inflation in check.
Still, Bank of Canada Governor Stephen Poloz said on Wednesday in an appearance before the Senate Standing Committee on Banking, Trade and Commerce that he was much more encouraged by the economy compared to previous testimony in November.
Canadian Foreign Minister Chrystia Freeland reiterated Canada’s opposition to proposed US steel and aluminum tariffs due to come into force next week, as pressure mounts to seal a quick deal on updating NAFTA.
US crude oil futures settled 0.5 percent higher at $68.05 a barrel as investors shrugged off data showing rising domestic fuel inventories and production. Oil is one of Canada’s major exports.
Canadian government bond prices were lower across a steeper yield curve in sympathy with US Treasuries. The two-year fell 2.5 Canadian cents to yield 1.932 percent and the 10-year declined 15 Canadian cents to yield 2.375 percent.
The 10-year yield touched its highest intraday since Feb. 15 at 2.376 percent.
Source: Brecorder
