The Canadian dollar weakened against its U.S. counterpart on Wednesday as oil, one of Canada’s major exports, pulled back from an earlier 11-month high and the greenback broadly climbed.
U.S. crude prices were down 0.3% at $53.04 a barrel as rising global COVID-19 cases took the shine off an earlier rally spurred by a bigger-than-expected drop in U.S. crude inventories.
The U.S. dollar rose against a basket of major currencies as data showed U.S. consumer prices increased solidly in December amid a surge in the cost of gasoline.
In Canada, producer prices rose 1.4% in December from November, following two months of decline, thanks to higher prices for lumber and energy products, Statistics Canada said in a flash estimate.
The Canadian dollar was trading 0.1% lower at 1.2725 to the greenback, or 78.59 U.S. cents, having traded in a range of 1.2703 to 1.2746.
Money markets see an increased chance of the Bank of Canada cutting interest rates closer to zero, as tightening economic restrictions to contain a second wave of COVID-19 cases offset optimism that activity will rebound later this year.
On Tuesday, Ontario declared an emergency after latest modelling put Canada’s most populous province on track to have more than 20,000 new COVID-19 cases per day by the middle of February.
Canadian government bond yields eased across the curve on Wednesday as U.S. Treasury yields fell. The 10-year dipped 1 basis point to 0.831%, having touched on Tuesday its highest in nearly 10 months at 0.887%.
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.