OTTAWA: The Canadian dollar touched a 2-1/2-month low against the greenback on Thursday before clawing back some gains as the currency continued to be dogged by uncertainty over the Greek crisis and reduced expectations for the Canadian economy.
Investors remained on watch about Greece's fate a day after the country's prime minister urged Greeks to reject an international bailout deal in a referendum this weekend. Greece defaulted on its debt to the International Monetary Fund earlier this week.
The loonie has shed about 2 percent since last Friday, initially weighed down by concerns over Greece, with the drop then exacerbated by disappointing Canadian economic data and by a decline in oil prices.
Economists say figures that showed a decline in Canadian economic growth at the start of the second quarter increase the odds that the Bank of Canada will cut interest rates again by the end of the year after opting for a quarter-point cut in January.
Although markets are still pricing in about a 64 percent chance that the bank will hold its benchmark rate at 0.75 percent in its next policy announcement later this month, that is down from about a 70 percent likelihood at the start of the week.
At 9:14 a.m. EDT (1314 GMT), the Canadian dollar was trading at C$1.2575 to the greenback, or 79.52 US cents, modestly stronger than the previous session's close of C$1.2589, or 79.43 US cents, according to Reuters data. Canadian markets were closed on Wednesday for Canada Day.
Thursday's level was weaker than the Bank of Canada's official Tuesday close of C$1.2490, or 80.06 US cents. Although many traders were away from their desks on Wednesday, the loonie shed 0.7 percent as the currency fell alongside the price of oil, a major Canadian export.
The currency's strongest level of the early Thursday session was C$1.2559, while its weakest level was C$1.2632, its lowest level since April 13.
Investors were taking in economic data from south of the border that showed the US economy added 223,000 jobs in June, slightly fewer than economists' expectations for a gain of 230,000. Canada's June job report will be released next Friday.
Canadian government bond prices were mixed across the maturity curve, with the two-year price up 4 Canadian cents to yield 0.461 percent and the benchmark 10-year falling 15 Canadian cents to yield 1.702 percent.
The Canada-US two-year bond spread was -18.5 basis points, while the 10-year spread was -67.4 basis points.
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