Loonie slides to seven-week low ahead of BoC rate decision

TORONTO: The Canadian dollar weakened to a nearly seven-week low against its US counterpart on Wednesday, as the greenback added to strong gains in the prior session and as investors awaited an interest rate decision from the Bank of Canada.

Canada's central bank is widely expected to leave its benchmark interest rate at 1.75% when the rate decision is announced at 10 a.m. (1400 GMT).

In October, the Bank of Canada hiked rates for the fifth time since July 2017. But the Canadian economy has taken a hit from the province of Alberta's mandatory production cut of oil - its biggest export - a slowdown in the housing market and wilting business sentiment over worries surrounding the US-China trade war.

Data from the overnight index swap market implies a greater-than 50% chance of a rate cut by December.

Meanwhile, souring confidence measures in the euro zone have kept the US dollar supported near 22-month highs.

At 8:51 a.m. (1251 GMT), the Canadian dollar was trading 0.1% lower at 1.3442 to the greenback, or 74.39 US cents. The currency touched its weakest intraday level since March 8 at 1.3461.

The loonie weakened despite the price of oil, one of Canada's major exports, hovering around six-month highs.

US crude prices were up 0.1% at $66.37 a barrel as data showing rising US stocks countered fears of tight supply resulting from OPEC output cuts and US sanctions on Venezuela and Iran.

Canadian government bond prices were higher across the yield curve in sympathy with US Treasuries and German Bunds.

The two-year rose 6.5 Canadian cents to yield 1.536%, its lowest since March 29, and the 10-year was up 43 Canadian cents to yield 1.705%.