TORONTO: The Canadian dollar weakened against its US counterpart on Tuesday as the greenback climbed broadly, while investors braced for a potential Bank of Canada interest rate hike on Wednesday.
The US dollar neared a six-month high against the Japanese yen as investors bought riskier assets, encouraged by signs that trade tensions have yet to hurt economic momentum.
Canada exports many commodities, including oil, and runs a current account deficit so its economy could also be hurt if the flow of trade or capital slows.
Money markets expect the Bank of Canada to raise its benchmark interest rate on Wednesday for the fourth time since last summer, from a current 1.25 percent.
At 9:12 a.m. EDT (1312 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.3130 to the greenback, or 76.16 US cents.
The currency, which on Monday touched its strongest intraday level in nearly four weeks at C$1.3066, traded in a range of C$1.3103 to C$1.3146.
Speculators have raised bearish bets on the Canadian dollar to the most since June 2017, data from the US Commodity Futures Trading Commission and Reuters calculations showed on Monday. As of July 3, net short positions had increased to 49,448 contracts from 32,799 a week earlier.
The value of Canadian building permits rose 4.7 percent in May from April, reversing the decline of the prior month, as strong intentions to build houses outweighed weakness in the non-residential sector, Statistics Canada said.
Separate data from the Canada Mortgage and Housing Corp showed that Canadian housing starts surged in June as groundbreaking on multiple unit urban homes jumped 46.4 percent, offsetting a small decline in single detached urban starts.
The price of oil rose because of growing supply outages, with Norway shutting one oilfield as hundreds of workers began a strike and Libya saying its production more than halved in recent months.
US crude prices were up 0.7 percent to $74.33 a barrel.
Canadian government bond prices were lower across the yield curve, with the two-year down 1.5 Canadian cents to yield 1.953 percent and the 10-year falling 13 Canadian cents to yield 2.184 percent.
The 2-year yield touched its highest intraday level since May 25 at 1.959 percent.
Source: Brecorder
