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The Canadian Dollar Is Weakening And It's Only Going To Get Worse

Strategists predict more declines in value.
The Canadian Dollar Is Weakening And It's Only Going To Get Worse

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday, but traded in a narrow range as investors braced for top-tier domestic data later in the week.

Canadian data on Tuesday is expected to show that the economy grew by just 0.1 percent in August, which would support expectations for slower growth in the third quarter after a strong first half of the year.

READ ALSO: It’s Going To Snow In Montreal Next Week... Seriously

Canada's employment report for October and the trade report for September are due on Friday.

The Canadian dollar has been the weakest performer of the G10 currencies since the Bank of Canada last raised rates in September, and some strategists predict more declines in value after the central bank on Wednesday dialed back expectations for more hikes this year.

The central bank also hiked in July, which was the first in nearly seven years. Its policy rate sits at 1 percent.

At 9:22 a.m. ET (1322 GMT), the Canadian dollar was trading at C$1.2847 to the greenback, or 77.84 U.S. cents, down 0.2 percent.

The currency traded in a range of C$1.2812 to C$1.2855.

On Friday, it touched its weakest in more than three months at C$1.2916.

Prices of oil, one of Canada's major exports, rose on expectations that Organization of the Petroleum Exporting Countries-led production cuts would be extended beyond March although rising Iraqi exports put a lid on prices.

U.S. crude prices were up 0.41 percent at $54.12 a barrel.

Bullish bets on the loonie have held near their highest levels in about five years, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Oct. 24, Canadian dollar net long positions had dipped to 72,332 contracts from 75,086 a week earlier.

Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries as investors awaited U.S. President Donald Trump's pick to lead the Federal Reserve.

The two-year rose 1.5 Canadian cents to yield 1.418 percent and the 10-year climbed 18 Canadian cents to yield 1.966 percent.

(Reporting by Fergal Smith; editing by Susan Thomas)

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