The Canadian dollar weakened against its U.S. counterpart on Thursday, while the greenback posted gains against a basket of major currencies and the Bank of Canada reiterated it may cut interest rates further.
The loonie was trading 0.2% lower at 1.3750 per US dollar, or 72.73 US cents, after trading in a range of 1.3715 to 1.3763.
“The US dollar has maintained its bid tone since last week’s non-farm payrolls report, which was stronger than expected,” said Michael Goshko, senior market analyst at Convera Canada ULC.
The dollar rose after the Federal Reserve on Wednesday delayed the start of interest rate cuts, perhaps until December, and despite a weak US producer price inflation report for May , adding to recent downward pressure on US Treasury yields.
Data on Friday showed that the US economy created many more jobs than expected in May. Also last week, the BoC became the first G7 central bank to cut interest rates.
At a conference in Ottawa on Thursday, BoC deputy governor Sharon Kozicki stuck to the central bank’s message that further cuts would come if inflation continued to decline, but that policy decisions would be made meeting by meeting.
Money markets see a 55% chance of a rate cut at the BoC’s next policy decision on July 24.
The price of oil, one of Canada’s main export products, was 0.15% above $78.62 per barrel, while Canadian government bond yields fell across the curve, following the movements of US Treasury bonds.
The 10-year bond fell 5.5 basis points to 3.337%, having earlier hit its lowest level since March 11 at 3.321%. (Reporting by Fergal Smith; Editing by Paul Simao)
