US Markets

Loonie hits 3-week low as investors raise BoC rate cut bets

Credit: REUTERS/MARK BLINCH

The Canadian dollar weakened to a three-week low against its U.S. counterpart on Friday as investors raised bets on a Bank of Canada interest rate cut over the coming months after domestic data showing the economy surprisingly shed jobs last month.

* Canadian dollar falls 0.4% against the greenback

* Loonie hits a three-week low at 1.3237

* Price of U.S. oil falls 2.1%

* Canadian bond prices rise across the yield curve

TORONTO, Nov 8 (Reuters) - The Canadian dollar weakened to a three-week low against its U.S. counterpart on Friday as investors raised bets on a Bank of Canada interest rate cut over the coming months after domestic data showing the economy surprisingly shed jobs last month.

Canada lost 1,800 jobs in October after robust job growth over the previous two months, data from Statistics Canada showed. Analysts had expected jobs to rise by 15,900.

The Bank of Canada last week left the door open to a rate cut as it expressed concern about trade uncertainty.

Chances of an easing at the central bank's next meeting in December rose to about 25% from 15% before the data, the overnight index swaps market indicated.

Housing data also showed declines.

Statistics Canada said that the value of Canadian building permits dropped by a larger-than-expected 6.5% in September to C$8.3 billion, while data from the Canadian Mortgage and Housing Corporation (CMHC) showed that the seasonally adjusted annualized rate of housing starts fell to 201,973 units in October from a revised 221,135 units in September.

At 10:22 a.m. (1522 GMT), the Canadian dollar was trading 0.4% lower at 1.3222 to the greenback, or 75.63 U.S. cents. The currency touched its weakest intraday level since Oct. 16 at 1.3237.

For the week, the loonie was on track to weaken 0.6%.

The currency's decline came as U.S. President Donald Trump said he had not agreed to roll back tariffs on Chinese goods, denting investor optimism that the United States and China would reach a trade deal.

Canada is a major exporter of commodities, including oil, so its economy could be hurt by a prolonged trade war. U.S. crude oil futures were down 2.1% at $55.95 a barrel. [O/R]

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 8.5 Canadian cents to yield 1.584% and the 10-year was up 35 Canadian cents to yield 1.577%.

On Thursday, the 10-year yield touched its highest intraday level since May 24 at 1.650%. (Reporting by Fergal Smith; editing by Jonathan Oatis) ((fergal.smith@thomsonreuters.com; +1 416 941 8113;)) Keywords: CANADA FOREX/

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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