Canadian dollar hits 8-month low on dovish Bank of Canada
Canadian dollar touches its weakest since Nov. 10
Price of U.S. oil rises 1%
2-year yield hits 14-month low before rebounding
By Fergal Smith
TORONTO, July 25 (Reuters) -The Canadian dollar weakened to an eight-month low against its U.S. counterpart on Thursday as investors grew confident the Bank of Canada would continue to ease policy following its latest interest rate cut the day before.
The loonie CAD= was trading 0.1% lower at 1.3815 per U.S. dollar, or 72.39 U.S. cents, after touching its weakest intraday level since Nov. 10 at 1.3848.
"The market thinks that the Bank of Canada delivered a dovish cut," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "The market feels more confident after the meeting that there will be another cut in September."
The Bank of Canada is shifting its focus to boosting the economy rather than suppressing inflation, which raises prospects of further interest rate cuts in the coming months, analysts say.
Investors see a roughly 60% chance the BoC will cut rates again at its next policy decision in September after the central bank on Wednesday lowered its policy rate by 25 basis points for a second time in two months to 4.50%.
Unwinding of short yen positions JPY= have also weighed on the loonie in recent days, Chandler said, adding that a popular trade for hedge funds has been to short the yen and go long on higher yielding currencies such as the loonie, as well as the Australian and New Zealand dollars AUD=NZD=.
The price of oil CLc1, one of Canada's major exports, rose after stronger-than-expected U.S. economic data stoked expectations for higher crude demand. U.S. crude oil futures were up 1% at $78.35 a barrel
Canadian government bond yields were mixed across a flatter curve. The 2-year CA2YT=RR was up 1.8 basis points at 3.650%, after earlier touching its lowest level since May last year at 3.559%.
Reporting by Fergal Smith; Editing by Sandra Maler
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
