CANADA FX DEBT-Canadian dollar slips to 6-day low, pushing back key 1.20 level
(New throughout, updates prices and market activity, adds strategist comment)
* The Canadian dollar weakens 0.5% against the greenback
* Loonie hits a 6-day low at 1.2124
* US oil price settles 0.2% higher
* The Canadian 10-year yield hits its lowest level since April 15
By Fergal Smith
TORONTO, May 26 (Reuters) – The Canadian dollar fell for a second day against its significantly stronger U.S. counterpart on Wednesday as some investors may have liquidated bullish positions in the Canadian dollar by failing to break through a key level.
The loonie was trading 0.5% lower at 1.2117 against the greenback, or 82.53 US cents, after hitting its lowest since last Thursday at 1.2124.
“The overall strength of the USD and the weakness of the Canadian dollar on crossovers” helped push USD-CAD above the 1.2100 level, said George Davis, chief technical strategist at RBC Capital Markets, saying reference to the loonie’s underperformance against other G10 currencies as well as the greenback. .
It has lost ground against the New Zealand dollar in particular after the Reserve Bank of New Zealand surprised markets with hints of higher interest rates next year.
The Bank of Canada has already announced more belligerent forecasts on the outlook for interest rates, which was one of the factors that helped the loonie climb to a six-year high last week at 1,2013.
“Participants were waiting to see how the (USD-CAD) pair trades around the psychological level of 1.2000, but with prices unable to push below here recently, short hedge flows may start to appear,” Davis said.
The Bank of Canada is thinking more concretely about how its digital currency looks and works, but currently doesn’t see a good reason to issue one, Deputy Governor Timothy Lane said.
Oil, one of Canada’s top exports, rose 0.2% to $ 66.21 a barrel as lower U.S. crude inventories raised expectations of improving demand ahead of the peak season summer driving.
Canadian bond yields have been mixed across the curve. The 10-year hit its lowest level since April 15 at 1.444% before rebounding to 1.453%, down less than a basis point on the day. (Report by Fergal Smith edited by Bernadette Baum and David Gregorio) (([email protected]; +1 647 480 7446;)) Keywords: CANADA FOREX / (UPDATE 1)
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