TORONTO: The Canadian dollar weakened against its US counterpart on Friday as the price of oil fell after Goldman Sachs cut its crude forecast, but trading in the currency will likely be muted ahead of next week's US Federal reserve rate decision.
The currency is heading for a flat week, with a Bank of Canada policy update on Wednesday providing little direction.
The conviction among Wall Street banks that the Fed will hike rates next week has decreased notably in the last month due to volatility in global markets.
That has in turn limited weakness in the Canadian dollar, which has lost 10 Canadian cents of value since mid-June.
At 8:31 a.m. ET (1231 GMT), the Canadian dollar was trading at C$1.3273 to the greenback, or 75.34 US cents, weaker than the Bank of Canada's official Thursday close of C$1.3228, or 75.60 US cents.
The currency's strongest level of the session was C$1.3216, while its weakest level was C$1.3275.
US crude prices were down 2.70 percent to $44.68, while Brent crude lost 2.29 percent to $47.77.
The Canadian dollar, which was underperforming most of its key currency counterparts, is unlikely to push outside of its recent C$1.3150 to C$1.33 range ahead of next week's Fed decision, according to several currency strategists.
Canadian government bond prices were flat to somewhat higher across the maturity curve, with the two-year price unchanged to yield 0.463 percent and the benchmark 10-year rising 10 Canadian cents to yield 1.483 percent.
The Canada-US two-year bond spread was -26.7 basis points, while the 10-year spread was -70.4 basis points.
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