TORONTO: The Canadian dollar was marginally weaker against its US counterpart on Wednesday, holding around levels not seen in nearly six weeks as a rallying greenback and diverging central bank policies kept the currency under pressure.
Brent crude prices, while slightly higher, were still below $57 a barrel as global supplies remained robust. The Bank of Canada had assumed a $60 price when it said it would not cut interest rates again if growth was at or above 1.5 percent in the first half of the year.
"There's been a deviation between Brent crude oil and $60, and that's an important input for the Bank of Canada," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
However, he added: "The overwhelming dominance of the US dollar across the board on the inference that the Fed is going to raise rates either in June or September is really the motivating and directional price influence."
The Canadian dollar was at C$1.2706 to the US dollar, or 78.70 US cents at about 9:32 a.m. (1432 GMT), weaker than Tuesday's close of C$1.2680, or 78.86 US cents.
Spitz said Friday's Canadian employment data for February, already forecast to show a 5,000-job decline, could send the Canadian dollar past C$1.28 hit at the end of January, its weakest level in six years.
"We could be targeting C$1.30 by the end of the week," he said, adding that guidance in next week's Fed rate announcement could also add further momentum to the US dollar bid.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 1 Canadian cent to yield 0.594 percent and the benchmark 10-year off 7 Canadian cents to yield 1.541 percent.
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