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The Canadian dollar CADUSD weakened to a nine-day low against its U.S. counterpart on Friday as long-term borrowing costs continued to push higher ahead of an interest rate decision next week by the Federal Reserve.

The loonie was trading 0.1 per cent lower at 1.3545 to the U.S. dollar, or 73.83 U.S. cents, after touching its weakest intraday level since March 6 at 1.3551.

For the week, the currency was down 0.5 per cent as hotter than expected U.S. inflation data tempered expectations for Federal Reserve interest rate cuts. The U.S. central bank is due to make a policy decision on Wednesday.

“Treasury yields have been higher all this week and that’s certainly seen USD-CAD follow suit,” said Michael Goshko, senior market analyst at Convera Canada ULC.

“You are seeing central banks push back on near-term rate cuts and markets come around to their thinking that summer time is going to be the first cut likely for most developed nation central banks.”

Higher Treasury yields increase the attractiveness of the U.S. dollar, analysts say.

Canadian housing starts rebounded more than expected in February as groundbreaking increased on multiple-unit urban homes but analysts were doubtful that the pickup in activity, seen key to relieving a housing shortage, would be sustained.

Separate data showed that wholesale trade grew by 0.1 per cent in January from December after the previous month was revised down to a decline of 0.3 per cent.

The price of oil, one of Canada’s major exports, consolidated its recent gains. U.S. crude oil futures settled 0.3 per cent lower at $81.04 a barrel.

Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 1.5 basis points at 3.545 per cent, after touching its highest level since Feb. 29 at 3.575 per cent.

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