The Canadian dollar weakened against its U.S. counterpart on Monday as the greenback broadly climbed and ahead of the expected renewal of the Bank of Canada’s monetary policy framework.
The loonie was trading 0.4 per cent lower at 1.2775 to the greenback, or 78.28 U.S. cents, after trading in a range of 1.2706 to 1.2783. The currency has weakened each day since last Wednesday.
“The CAD is finding it hard to resist the broader push higher in the USD this morning even with the risk backdrop of stocks and commodities not especially negative,” strategists at Scotiabank, including Shaun Osborne, said in a note.
The U.S. dollar rose against a basket of major currencies ahead of a series of central bank meetings this week including the U.S. Federal Reserve, with investors eyeing how quickly it will unwind bond-buying and looking for clues on when it will start to raise rates in 2022.
The Bank of Canada is expected to leave its inflation target unchanged at 2 per cent as concern about the cost of living rises and the COVID-19 outlook remains uncertain.
An announcement is due and 10 a.m. EST (1500 GMT) and the bank’s governor, Tiff Macklem, and Finance Minister Chrystia Freeland are speaking to reporters an hour later.
The price of oil, one of Canada’s major exports, was pressured by new concerns about the Omicron coronavirus variant and doubts around the effectiveness of vaccines against it. U.S. crude futures were down 0.3 per cent at $71.46 a barrel.
Canadian government bond yields eased across the curve. The 10-year rate was down 1 basis points at 1.455 per cent, after dipping on Friday below its U.S. equivalent for the first time since October.
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