Canadian dollar lags G10 peers, giving back some of Tuesday's rally

TORONTO: The Canadian dollar weakened against its US counterpart and all other G10 currencies on Wednesday, giving back some of the previous day's gains as domestic attention shifted to next week's federal budget.

The loonie was 0.2% lower at 1.2550 to the greenback, or 79.68 US cents, having traded in a range of 1.2530 to 1.2575.

It was one of only two G10 currencies to lose ground against the US dollar. The other was the Swiss franc, which fell 0.1%.

Canada's Liberal government will deliver on its promise to spend big when it presents its first budget in two years next Monday amid a fast-rising third wave of COVID-19 infections and ahead of an election expected in coming months.

A Bank of Canada interest rate decision is also due next week. Some strategists expect the central bank to cut bond purchases.

Global stock markets pushed to record highs after data on Tuesday showed US inflation was not rising too fast as the economy re-opens.

Canada sends about 75% of its exports to the United States, including oil. US crude prices were up 2.1% at $61.46 a barrel on revised oil demand forecasts and despite concerns over rising coronavirus cases and vaccine rollouts.

Canadian government bond yields were higher across the curve, tracking US Treasuries. The 10-year rose 1.8 basis points to 1.523%.