*
Canadian dollar weakens 0.4% against the greenback
*
Touches its weakest since Jan. 20 at 1.3475
*
Ivey PMI shows economy growing in January
*
10-year yield touches a near 4-week high
(Adds details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 6 (Reuters) - The Canadian dollar weakened
to its lowest level in over two weeks against its U.S.
counterpart on Monday as investors worried the Federal Reserve
will turn more hawkish and despite data upbeat domestic economic
data.
The loonie was trading 0.4% lower at 1.3445 to the
greenback, or 74.38 U.S. cents, after touching its weakest since
Jan. 20 at 1.3475.
"Both king (U.S.) dollar and the bond market selloff are
back as the next round of Fedspeak will likely be hawkish,"
Edward Moya, senior market analyst at OANDA in New York, said in
a note. "The (U.S.) labor market is too strong and with
inflation still nowhere near target."
Equity markets globally fell and the safe-haven U.S. dollar gained ground against a basket of major currencies after
Friday's blockbuster U.S. jobs report ran counter to hopes that
the Fed will soon pause its aggressive tightening campaign and
then shift to cutting rates later this year.
The Bank of Canada has already signaled a pause. It will cut
rates by a half a percentage point to 4% by December, according
to a median of market participants surveyed by the central bank.
Canadian economic activity expanded in January at the sharpest pace in eight months as employment climbed and supplier deliveries speeded up, Ivey Purchasing Managers Index (PMI) data showed. The price of oil, one of Canada's major exports, settled nearly 1% higher at $74.11 a barrel on optimism of increased demand from China. China's rapid reopening is likely to fuel demand for commodities produced in abundance by Canada, potentially helping Canada's economy avoid a recession. The Canadian 10-year yield touched its highest level since Jan. 11 at 3.058% before dipping to 3.040%, up 11.1 basis points on the day. (Reporting by Fergal Smith; Editing by Andrea Ricci and Sandra Maler)
