Canadian dollar posts longest losing streak in six years

TORONTO: The Canadian dollar weakened for an eighth straight day against its US counterpart on Friday as oil prices fell and after the Bank of Canada cut interest rates further earlier in the week.

The loonie was trading 0.1% lower at 1.3835 per US dollar, or 72.28 US cents. Earlier in the session, the currency touched 1.3848, matching the eight-month low that was set on Thursday. The daily losing streak was the longest since December 2018. For the week, it was down 0.7%.

“A pretty quiet end to the week, but the continued decline in WTI crude oil prices and CAD weakness on the crosses have been catalysts to push USD-CAD higher today,” said George Davis, chief technical strategist at RBC Capital Markets.

“This year’s prior high from mid-April at 1.3846 has been able to cap rallies (in USD-CAD) so far, with the market keeping a close eye on this level into next week.” The price of oil, one of Canada’s major exports, settled 1.4% lower at $77.16 a barrel on declining Chinese demand and hopes of a Gaza ceasefire agreement.

On Wednesday, the BoC lowered its benchmark rate for a second straight month, cutting by 25 basis points to 4.50%. The central bank is shifting its focus to boosting the economy rather than suppressing inflation, which raises prospects of additional easing in the coming months, analysts say.

Investors see a roughly 70% chance of a rate cut at the next policy announcement in September. Canadian bond yields fell across the curve, tracking moves in US Treasuries after US data showed prices rising modestly in June, supporting bets the Federal Reserve would begin its easing cycle in the coming months. The 10-year was down 5 basis points at 3.324%, trading at nearly its lowest level in one month.