TORONTO: The Canadian dollar was slightly weaker against its US counterpart on Wednesday, pulled lower as crude prices marched back toward five-year lows following an OPEC forecast of sinking demand next year.
The Organization of the Petroleum Exporting Countries said it expects demand for its oil will be 280,000 barrels per day lower in 2015 that it had forecast previously. Canada is a major oil producer and the Canadian dollar is sensitive to moves in crude prices.
"There's an eye on oil given that we're pressing toward the lows reached yesterday," Greg Moore, senior currency strategist at Royal Bank of Canada, said of the Canadian dollar's moves.
"But really we're still more consolidating within the range of the past couple of days in view of the fact that there hasn't been any significant macro developments or bigger moves in commodities in the past 12 hours or so."
At 9:26 a.m. (1426 GMT), the Canadian dollar, which was underperforming nearly all its counterparts, was at C$1.1461 to the US dollar, or 87.25 US cents, weaker than Tuesday's finish of C$1.1440, or 87.41 US cents.
Moore said there was a chance the loonie could break through C$1.15 again in the coming days, and he added that the volatility of oil prices raises the possibility that the Canadian dollar will close the year weaker than C$1.15.
The currency also could be moved by a press conference later on Wednesday morning by Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins following the release of the bank's Financial System Review.
Canadian government bond prices were mixed across the maturity curve. The two-year bond was off half a Canadian cent, yielding 1.024 percent, and the benchmark 10-year bond was up 7 Canadian cents with a yield of 1.872 percent.
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