TORONTO: The Canadian dollar weakened against the US dollar on Wednesday, driven by overnight flows out of Asia and after the US Senate voted down a bill that would force the approval of the Keystone XL oil pipeline.
The US dollar touched a seven-year high against the yen ahead of the Federal Reserve's October meeting minutes, due later on Wednesday, which may shed more light on the divergence in monetary policy between the US central bank and its major global peers.
The bill for the TransCanada Corp pipeline fell just short of the 60 votes needed for passage, and new legislation is likely to be introduced next year. The pipeline, if approved, would transport more than 800,000 barrels per day of oil from the Alberta oil sands to the US Gulf Coast.
Mazen Issa, senior Canada macro strategist at TD Securities, said the Asian market pushed the US dollar higher against the Canadian currency overnight.
"But there wasn't much in terms of a trigger point," Issa said. "Right now, it's still a wait-and-see mode.
"Keystone may have a role to play in the overnight session, but that's just one aspect."
At 8:52 a.m. (1352 GMT), the Canadian dollar was trading at C$1.1345 to the greenback, or 88.14 US cents, weaker than Tuesday's close of C$1.1299, or 88.50 US cents.
Canadian government bond prices were lower across the maturity curve, with the two-year down 2 Canadian cents to yield 1.013 percent and the benchmark 10-year shedding 26.5 Canadian cents to yield 2.027 percent.
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