Skip to main content

The Canadian dollar weakened against its U.S. counterpart on Tuesday, with the currency pulling back from a near two-week high earlier in the session as investors weighed the prospect of an unexpected interest rate cut next week by the Bank of Canada.

At 4:27 p.m. (2027 GMT), the Canadian dollar was trading 0.3 per cent lower at 1.3296 to the greenback, or 75.21 U.S. cents. The currency touched its strongest intraday level since Aug. 14 at 1.3225.

“There is a lot of chatter about Canadian dollar selling flows,” said Adam Button, chief currency analyst at ForexLive. “The Bank of Canada is one week away now and that has traders thinking about the possibility for a surprise rate cut.”

Story continues below advertisement

Chances of an interest rate cut at the central bank’s Sept. 4 policy announcement have climbed to 25 per cent from less than 10 per cent at the beginning of the month.

“There is a strong focus (from the Bank of Canada) on trade risk and it has obviously gone in the wrong direction,” Button said.

The bank highlighted last month the risks trade wars pose to the global economy as it left its benchmark interest rate on hold at 1.75 per cent.

At the end of July, the Federal Reserve eased interest rates for the first time since 2008.

The loonie weakened on Tuesday even as the price of oil, one of Canada’s major exports, gained ground. U.S. crude oil futures settled 2.4 per cent higher at $54.93 a barrel.

Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 10.5 Canadian cents to yield 1.341 per cent and the 10-year was up 87 Canadian cents to yield 1.125 per cent.

Canada’s 10-year yield fell 21.6 basis points below the 2-year yield, which was the curve’s biggest inversion since May 1999.

Story continues below advertisement

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter