May 19, 2024

CANADA FX DEBT-C$ Weakens As Investors See 'Dovish' Bank Of Canada Risk – 03/04/2024

The Canadian dollar weakened against its U.S. counterpart on Monday as oil prices fell and investors awaited a rate decision from the Bank of Canada this week.

The loonie was down 0.1% at 1.3575, or 73.66 US cents, to the dollar, after trading between 1.3546 and 1.3583. It hit a 2-1/2-month low of 1.3605 last Wednesday.

Investors are “waiting for more details on the BOC's interest rate path,” Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc., said in a note.

A dovish report from the central bank could weigh on the Canadian dollar, Richardson added.

Money markets expect the Bank of Canada to keep its key interest rate on hold at a 22-year high of 5% on Wednesday, but to begin an easing cycle in April or June as the domestic economy slows and inflation cools.

Data due Friday is expected to show the economy added 20,000 jobs in February, a slower pace than in January.

Oil prices, one of Canada's main exports, fell as a widely expected expansion of voluntary production cuts by the OPEC+ producer group was offset by echoes of demand. U.S. crude futures were down 1.5% at $78.74 a barrel.

Canadian government bond yields are rising on the curve, tracking US government bond yields. The 10-year note rose 2.7 basis points to 3.455%, after hitting a three-week low of 3.423% on Friday. (Reporting by Bergl Smith, Editing by Alistair Bell)