The Canadian dollar weakened against its U.S. counterpart on Thursday, as the greenback posted gains against a basket of major currencies and the Bank of Canada reiterated that it may cut its interest rates further. interest.
The loonie was trading 0.2% lower at 1.3750 per U.S. dollar, or 72.73 U.S. cents, after trading in a range of 1.3715 to 1.3763.
“The U.S. dollar has continued its upward trend since last week’s stronger-than-expected nonfarm payrolls report,” said Michael Goshko, senior market analyst at Convera Canada ULC.
The U.S. dollar rose after the Federal Reserve on Wednesday pushed back the start of interest rate cuts to possibly as late as December and despite a report on U.S. producer price inflation for the month of May which added to the recent downward pressure on US Treasury yields.
Data on Friday showed that the U.S. economy created far more jobs than expected in May. Also last week, the Bank of Canada became the first G7 central bank to cut interest rates.
Speaking at a conference in Ottawa on Thursday, BoC Deputy Governor Sharon Kozicki maintained the central bank’s message that further cuts would follow if inflation continued to fall, but that policy decisions would be taken in one meeting at a time.
Money markets estimate a 55% chance of a rate reduction during the Bank of Canada’s next monetary policy decision on July 24.
The price of oil, one of Canada’s top exports, rose 0.15% to $78.62 per barrel, while Canadian government bond yields fell across the curve. , following the movements of US Treasury bonds.
The 10-year rate was down 5.5 basis points at 3.337%, after hitting its lowest level since March 11 at 3.321%. (Reporting by Fergal Smith; Editing by Paul Simao)
