TORONTO: The Canadian dollar weakened to a one-week low against its US counterpart on Wednesday as markets braced for a Federal Reserve interest rate decision, but losses were pared as oil prices rose and after firm domestic data.
The US dollar climbed against a basket of major currencies, briefly extending gains after underlying US inflation increased more than expected in February.
The US Federal Reserve is expected to hold interest rates steady as it balances continued concerns about the health of the global economy with fresh signs that domestic inflation is starting to rear its head.
Canadian manufacturing sales rose 2.3 percent in January, far more than expected, while sales volumes reached their highest since before the 2008-2009 recession, data from Statistics Canada showed.
Expiring currency hedges may give exporters a competitive edge.
Oil prices firmed on an announcement that producers will meet next month in Qatar to discuss a proposal to freeze output and on growing signs of a decline in US crude production.
US crude prices were up 2.20 percent to $37.14 a barrel.
At 9:20 a.m. EDT (1320 GMT), the Canadian dollar was trading at C$1.3364 to the greenback, or 74.83 US cents, slightly weaker than Tuesday's close of C$1.3362, or 74.84 US
The currency's strongest level of the session was C$1.3349, while it touched its weakest since March 9 at C$1.3406.
Foreign investors resumed buying Canadian securities in January with a big push into corporate and government debt, while Canadians sold off their positions in foreign equities, data from Statistics Canada showed.
Canadian government bond prices were mixed across the maturity curve, with the two-year price down 1 Canadian cent to yield 0.578 percent and the benchmark 10-year falling 6 Canadian cents to yield 1.336 percent.
The 10-year yield last week posted a two-month high at 1.382 percent.
The Canada-US two-year bond spread was 2.1 basis points more negative at -41.5 basis points, its most negative since Jan. 27, as US Treasuries underperformed.
Comments
Comments are closed for this article.