Loonie dips 0.1% against the greenback
Trades in a range of 1.3932 to 1.3971
Price of oil increases 1.5%
Bond yields were little changed across the curve
TORONTO, Oct 8 (Reuters) – The Canadian dollar edged lower against its U.S. counterpart on Wednesday but the move was limited as oil prices rose and investors awaited domestic jobs data at the end of the week.
The loonie was trading 0.1% lower at 1.3958 per U.S. dollar, or 71.64 U.S. cents, after moving in a range of 1.3932 to 1.3971. The currency has been in a holding pattern since last Thursday when it hit a 4-1/2-month low at 1.3986.
“The pair continues to trade sideways as opposing fundamental forces keep it in balance,” said Tony Valente, a senior FX dealer at AscendantFX.
“The Fed’s (U.S. Federal Reserve) recent rate cut is exerting downward pressure on the USD, while Canada’s weaker trade data and growing expectations that the Bank of Canada could follow with additional easing are limiting upside for the loonie.”
The Canadian central bank cut interest rates last month for the first time since March, lowering the benchmark rate to 2.50%.
Canada’s trade deficit widened in August to its second-highest level on record as exports declined in the face of U.S. tariffs on Canadian goods, data on Tuesday showed. Also on Tuesday, U.S. President Donald Trump promised to treat Canada fairly in talks over tariffs but was less committed about a continental trade deal that also includes Mexico. Canada sends about 75% of its exports to the United States, including oil. U.S. crude futures rose 1.5% to $62.57 a barrel on worries the U.S. and Europe would keep sanctions on Russia for longer.
Canada’s employment report for September, due on Friday, is expected to show the economy adding 5,000 jobs and the unemployment rate edging up to 7.2% from 7.1% in August.
“A weak print would likely cement expectations for a December BoC cut and push USD-CAD towards the 1.40 level, where we see a ceiling for the pair,” strategists at Monex Europe said in a note.
Canadian bond yields were little changed across the curve, with the 10-year trading at 3.185%. (Reporting by Fergal Smith in Toronto; Editing by Nia Williams)
