TORONTO: The Canadian dollar weakened to a nine-day low against its US counterpart on Friday as long-term borrowing costs continued to push higher ahead of an interest rate decision next week by the Federal Reserve.

The loonie was trading 0.1% lower at 1.3545 to the US dollar, or 73.83 US cents, after touching its weakest intraday level since March 6 at 1.3551.

For the week, the currency was down 0.5% as hotter than expected US inflation data tempered expectations for Federal Reserve interest rate cuts.

The US central bank is due to make a policy decision on Wednesday.

“Treasury yields have been higher all this week and that’s certainly seen USD-CAD follow suit,” said Michael Goshko, senior market analyst at Convera Canada ULC.

“You are seeing central banks push back on near-term rate cuts and markets come around to their thinking that summer time is going to be the first cut likely for most developed nation central banks.” Higher Treasury yields increase the attractiveness of the US dollar, analysts say.

Canadian housing starts rebounded more than expected in February as groundbreaking increased on multiple-unit urban homes but analysts were doubtful that the pickup in activity, seen key to relieving a housing shortage, would be sustained.

Separate data showed that wholesale trade grew by 0.1% in January from December after the previous month was revised down to a decline of 0.3%.

The price of oil, one of Canada’s major exports, consolidated its recent gains. US crude oil futures settled 0.3% lower at $81.04 a barrel.

Canadian government bond yields moved higher across the curve, tracking moves in US Treasuries. The 10-year was up 1.5 basis points at 3.545%, after touching its highest level since Feb. 29 at 3.575%.


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