TORONTO: The Canadian dollar weakened against its US counterpart on Thursday as oil prices fell to a one-month low and expectations declined for an interest rate cut this year from the Federal Reserve.
The price of oil, one of Canada's major exports, was pressured by oversupply fears after US crude oil inventories rose sharply. US crude oil futures settled 2.8% lower at $61.81 a barrel.
"We've seen oil prices take a bit of a hammering ... that has pulled the Canadian dollar down a bit," said Shaun Osborne, chief currency strategist at Scotiabank.
Higher US rates after the Federal Reserve rate decision on Wednesday have helped support the US dollar, Osborne added.
The US dollar gained against most currencies as traders pared their bets of an interest rate cut from the Fed after Fed Chairman Jerome Powell said a decline in inflation this year could be due to transitory factors.
At 3:55 p.m. (1955 GMT), the Canadian dollar was trading 0.2% lower at 1.3470 to the greenback, or 74.24 US cents.
The currency, which on Wednesday touched its strongest intraday level in more than one week at 1.3378, traded in a narrow range of 1.3430 to 1.3476 ahead of US jobs data on Friday.
China's suspension of two Canadian pork exporters' permits was due to a labeling problem, Canada's agriculture minister said, adding that she was hopeful of it being resolved.
Canadian government bond prices were lower across a steeper yield curve, with the two-year down 9.5 Canadian cents to yield 1.622% and the 10-year falling 59 Canadian cents to yield 1.765%.
The 10-year yield touched its highest intraday since April 23 at 1.774%.
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