The Canadian dollar weakened on Tuesday to its lowest in nearly three weeks against its U.S. counterpart, as oil fell and higher bond yields bolstered the greenback against a basket of major currencies.
The U.S. dollar broadly climbed, notching a one-year high against the yen, as accelerating U.S. vaccinations and plans for a major stimulus package stoked inflation expectations and raised Treasury yields.
The price of oil, one of Canada’s major exports, lost ground as the Suez Canal reopened to traffic, while focus turned to an OPEC+ meeting this week that is likely to agree an extension to supply curbs amid disappointing demand prospects.
U.S. crude prices were down 2 per cent at $60.32 a barrel, while the Canadian dollar fell 0.2 per cent to 1.2618 per greenback, or 79.25 U.S. cents. The currency touched its weakest intraday level since March 10 at 1.2639.
Canadian payroll employment fell by 134,500 in January following an increase of 48,000 in December as tighter public health measures weighed on hiring, data from Statistics Canada showed.
Canada’s GDP data for January is due on Wednesday which could guide expectations for the Bank of Canada policy outlook. Strategists say the central bank could reduce its bond purchases in April.
Canadian government bond yields were higher across the curve in tandem with U.S. Treasuries. The 10-year rose 2.9 basis points to 1.564 per cent but holding below the 14-month high notched earlier this month at 1.677 per cent.
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