TORONTO: The Canadian dollar tracked crude oil lower on Wednesday against a broadly firmer US dollar as stronger-than-expected US jobs data fed Federal Reserve rate hike expectations, while attention turned to the Bank of Canada interest rate decision.
Crude oil prices retreated after a rise in US inventories added to the global glut and investors discounted the possibility of OPEC cutting output at this week's meeting.
US private employers added 217,000 jobs in November, signaling job growth is likely strong enough to support a Federal Reserve rate hike this month.
At 8:58 a.m. EST (1358 GMT), the Canadian dollar was trading at C$1.3403 to the greenback, or 74.61 US cents, weaker than the Bank of Canada's official close of C$1.3364, or 74.83 US cents.
The currency's strongest level of the session was C$1.3355, while its weakest level was C$1.3406, a nine-day low.
Against euro, the Canadian dollar firmed to C$1.4181 after a soft inflation reading from the euro zone raised expectations for aggressive policy easing from the European Central Bank on Thursday.
Canadian government bond prices were mixed across the maturity curve, with the two-year price flat to yield 0.596 percent and the benchmark 10-year falling 10 Canadian cents to yield 1.503 percent.
The Canada-US two-year bond spread was 3.4 basis points wider at -34.6 basis points, while the 10-year spread was 1 basis point wider at -67.4 basis points as Treasuries underperformed on the US data.
US crude prices were down 2.05 percent to $40.99 a barrel, while Brent crude lost 1.89 percent to $43.6.
The Bank of Canada is widely expected to hold interest rates at 0.50 percent when it makes its policy announcement at 10:00 a.m. EST (1500 GMT).
Also today, Federal Reserve Chair Janet Yellen could cement the case for a US interest rate hike when she speaks on the economic outlook before the Economic Club of Washington at 12:25 p.m. EST (1725 GMT).
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