The Canadian dollar weakened to its lowest point in nearly three weeks against its U.S. counterpart on Monday, as the greenback climbed broadly and investors bet the Bank of Canada would leave interest rates unchanged later this week.
At 3:32 p.m., the Canadian dollar was trading 0.1 per cent lower at 1.3308 to the greenback, or 75.14 U.S. cents. The currency touched its weakest level since Feb. 14 at 1.3338.
Canadian data on Friday showing that economic growth slowed more than expected in the fourth quarter has underpinned market expectations the Bank of Canada will not hike interest rates on Wednesday.
“The data is coming out worse and worse and I think that will continue,” said Christian Lawrence, senior market strategist at Rabobank. “I don’t think the Bank of Canada is raising rates again.”
The Bank of Canada, which has tightened by 125 basis points since July 2017, is widely expected to leave its benchmark rate on hold at 1.75 per cent on Wednesday. The central bank may be closer to a policy turning point, according to economists polled by Reuters.
The U.S. dollar rose against a basket of major currencies, as U.S. stocks fell despite rising hopes that China and the United States are moving closer to a trade deal that would end sparring between the world’s two biggest economies.
Canada exports many commodities, including oil, so its economy could benefit from an improved outlook for global trade.
U.S. crude oil futures settled 1.4 per cent higher at $56.59 a barrel.
Speculators have cut their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Feb. 19, net short positions had fallen to 36,437 contracts from 37,537 in the prior week.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 3.5 cents to yield 1.747 per cent and the 10-year was up 32 cents to yield 1.90 per cent.
Canada’s trade data for December is due on Wednesday and the February employment report is due on Friday.