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Canadian dollar adds to losses on dovish Bank of Canada

Forex Dec 07, 2017 10:20AM ET
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© Reuters. FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto
 
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TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday, adding to losses from the day before, when the Bank of Canada held interest rates steady and tempered expectations for a hike early next year.

The central bank struck a more dovish tone than investors had expected after very strong employment data on Friday.

Still, the Canadian dollar is likely to strengthen over the coming year, a Reuters poll showed, on assumptions that uncertainty over trade lifts and a stronger economy boosting inflation will prompt the Bank of Canada to resume raising rates.

At 9:39 a.m. ET (1439 GMT), the Canadian dollar was down 0.5 percent at C$1.2847 to the greenback, or 77.84 U.S. cents.

The currency, which touched its weakest since Friday at C$1.2860, lost ground despite firm domestic data and a higher price of oil, one of Canada's major exports.

U.S. crude (CLc1) prices rose 0.7 percent to $56.37 a barrel.

The value of Canadian building permits increased 3.5 percent in October from September, more than economists had expected, on increased plans for commercial and residential construction.

The U.S. dollar (DXY) reached a two-week high against a basket of currencies on optimism that the United States will push through a tax overhaul.

Canadian government bond prices were higher across the yield curve, with the two-year (CA2YT=RR) up 1.5 Canadian cents to yield 1.481 percent and the 10-year (CA10YT=RR) rising 17 Canadian cents to yield 1.837 percent.

The gap between Canada's two-year yield and its U.S. equivalent widened by 1.5 basis points to a spread of -33.3 basis points.

Canadian dollar adds to losses on dovish Bank of Canada
 

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