TORONTO: The Canadian dollar weakened against the greenback for a fifth straight session on Tuesday as markets awaited comments from the heads of the Canadian and US central banks, seeking clues on when the two banks will make their next interest rate moves.
Janet Yellen will give the US Federal Reserve's semi-annual Monetary Policy Report to the Senate Banking
Committee at 10 a.m. EST (1500 GMT), with investors hoping to get more guidance on when the Fed will make its first rate hike since 2006.
Bank of Canada Governor Stephen Poloz will hold a press conference in the afternoon, and markets will look for clues on if, or when, the bank will cut rates again following its surprise 0.25 basis point cut in January. The market is pricing in a nearly 76 percent chance of another cut next week.
The Canadian dollar has been under pressure as slumping oil prices weigh on the country's crude-exporting economy, and the monetary policies of Canada and its largest trading partner diverge.
At 9:34 a.m. (1434 GMT), the Canadian dollar, which was underperforming most of its key counterparts, was at C$1.2622 to the greenback, or 79.23 US cents, softer than Monday's finish of C$1.2576, or 79.52 US cents.
"Assuming we don't see a significant deviation in oil prices, then I would think dips in USD/CAD today will be worth buying into," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London.
CIBC expects the Canadian dollar to hit C$1.30 by the middle part of this year, and Stretch predicts the currency will retreat to a near six-year low of C$1.28 or more in the coming sessions.
"It's a question is how quickly we'll get there," he said. "The timing of that C$1.30 target will be very much dependent on how quickly Fed tightens. I would still prefer to be playing USD/CAD from the long side."
Canadian government bond prices were mostly lower across the maturity curve, with the two-year off 4.5 Canadian cents to yield 0.410 percent and the benchmark 10-year falling 17 Canadian cents to yield 1.374 percent.
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