C$ hits 12-day low as businesses see price growth easing
Canadian dollar weakens 0.3% against the greenback
Touches weakest since July 3 at 1.3674
Canadian businesses expect price growth to slow
2-year yield hits a six-month low at 3.763%
By Fergal Smith
TORONTO, July 15 (Reuters) -The Canadian dollar weakened to a 12-day low against its U.S. counterpart on Monday as a Bank of Canada business survey pointed to a decline in inflation, raising bets the central bank will cut interest rates further this month.
The loonie CAD= was trading 0.3% lower at 1.3670 to the U.S. dollar, or 73.15 U.S. cents, after touching its weakest intraday level since July 3 at 1.3674.
Canadian "businesses expect the growth of their input prices and selling prices to slow, suggesting that inflation will continue to decline over the coming year," the Bank of Canada said in its second-quarter Business Outlook Survey.
"This expected easing in inflationary pressures will be good news for the Bank of Canada as policymakers decide whether to cut interest rates again this month," Andrew Grantham, a senior economist at CIBC Capital Markets, said in a note.
Chances of a rate cut at next week's BoC policy announcement rose to 80% from 77% before the survey's release, swaps market data showed 0#BOCWATCH.
Last month, the BoC became the first G7 central bank to begin easing policy, lowering its benchmark rate by 25 basis points to 4.75%.
Canada's consumer price index report for June, due on Tuesday, is expected to show inflation slowing to an annual rate of 2.8% after a surprise uptick to 2.9% in May.
The U.S. dollar .DXY rose on Monday against a basket of major currencies as investors bet that an assassination attempt on former President Donald Trump has boosted his reelection chances.
Trump has vowed to increase tariffs on Chinese imports, potentially unleashing a new trade war. Canada's economy is particularly dependent on trade.
Canadian bond yields fell across the curve. The 2-year CA2YT=RR was down 5.1 basis points at 3.797%, after earlier touching its lowest since Jan. 12 at 3.763%.
Reporting by Fergal Smith; Editing by Leslie Adler
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