Canadian dollar hits 5-week low ahead of expected rate cut
Canadian dollar falls 0.2% against the greenback
Touches its weakest since June 14 at 1.3774
Price of U.S. oil decreases 0.4%
Bond yields trade mixed across flatter curve
By Fergal Smith
TORONTO, July 22 (Reuters) -The Canadian dollar weakened to a five-week low against its U.S. counterpart on Monday as speculators raised their bearish bets on the currency ahead of a potential interest rate cut this week by the Bank of Canada.
The loonie CAD= was trading 0.2% lower at 1.3760 to the U.S. dollar, or 72.67 U.S. cents, after touching its weakest intraday level since June 14 at 1.3774.
"The CAD's focus this week falls squarely on Wednesday's BoC policy decision where a 25 bps (basis points) cut is more or less fully priced in at this point," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.
The Canadian central bank is widely expected to cut its benchmark interest rate by 25 basis points to 4.50% on Wednesday, its second cut in as many months, after recent data showed inflation easing and a decline in retail sales.
Investors see a 94% chance of a rate cut this week, while they are expecting 62 basis points of easing in total by the end of the year, swaps market data shows. 0#BOCWATCH
Non-commercial accounts had increased their net short positions in the Canadian dollar to 132,473 contracts as of July 16 from 111,212 in the prior week, data on Friday from the U.S. Commodity Futures Trading Commission showed. 1090741NNET
In June, speculative net shorts in the currency reached an all-time high of 147,931 contracts.
The price of oil, one of Canada's major exports, fell to a five-week low as a surprise move by China to lower a key short-term policy rate did little to boost sentiment. U.S. crude oil futures CLc1 were down 0.4% at $79.85 a barrel.
Canadian bond yields were mixed across a flatter curve. The 10-year CA10YT=RR was down 2 basis points at 3.377%.
Reporting by Fergal Smith; Editing by Jan Harvey
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