The Canadian dollar weakened on Tuesday for a second day against its U.S. counterpart as oil prices dipped after hitting multi-year highs and the greenback broadly climbed, with the loonie giving back much of Friday’s sharp rally.
The price of oil, one of Canada’s major exports, pulled back as producers from the Organization of the Petroleum Exporting Countries (OPEC) as well as Russia and others clashed over plans to raise supply to meet rising global demand.
U.S. crude prices were down 0.5 per cent at $74.80 a barrel, while the U.S. dollar gained ground against a basket of major currencies as disappointing German economic data weighed on the euro.
The loonie was trading 0.4 per cent lower at 1.2390 to the greenback, or 80.71 U.S. cents, after dipping 0.2 per cent on Monday.
On Friday, the currency notched its biggest gain in eight weeks, advancing nearly 1 per cent, after the U.S. nonfarm payrolls report suggested space for the Federal Reserve to wait before tightening monetary policy.
The Fed is due on Wednesday to release the minutes from its June 15-16 policy meeting, while the Canadian jobs report for June is due on Friday.
Investors are likely to wait until after the Fed minutes and the Canadian jobs report before making any significant moves in the loonie, strategists at Scotiabank, including Shaun Osborne, said in a note.
The Canadian data could offer clues on the Bank of Canada policy outlook, with some analysts expecting the central bank to cut bond purchases again at next week’s interest rate announcement.
On Monday, a BoC survey showed that business sentiment in Canada continues to improve.
Canadian government bond yields eased across a flatter curve, with the 10-year down 2.8 basis points at 1.373 per cent.
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