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Canadian dollar weakens 0.1% against greenback
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Trades in a range of 1.3561 to 1.3609
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Canadian economy stalls in fourth quarter
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Canadian bond yields trade mixed
TORONTO, Feb 28 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday after the release of disappointing GDP data that reinforced investor bets for the Bank of Canada to leave its benchmark interest rate on hold in a policy decision next week.
The Canadian economy recorded zero growth in the final three months of 2022, massively underperforming expectations, though economic activity likely rebounded with a 0.3% increase in January, Statistics Canada data showed. Money markets continued to expect that Canada's central bank will hold its benchmark rate at 4.50% in a March 8 policy announcement and trimmed bets that it will be forced to tighten again later this year. The central bank has said that no further interest rate increases would be needed if the economy stalls and inflation comes down as it expects. The Canadian dollar was trading 0.1% lower at 1.3590 to the greenback, or 73.58 U.S. cents, after moving in a range of 1.3561 to 1.3609. On Friday, it hit a seven-week low at 1.3665. The price of oil, one of Canada's major exports, rallied as hopes for a solid economic rebound in China offset worries about further U.S. interest rate hikes dragging on consumption in the world's biggest economy. U.S. crude prices were up 1.7% at $76.96 a barrel. Canadian government bond yields were mixed across a steeper curve. The 2-year was little changed at 4.266%, while the 10-year was up 2.5 basis points at 3.419%. Still, the 10-year was trading 1.9 basis points further below its U.S. equivalent at a gap of 54.7 basis points as U.S. yields climbed. (Reporting by Fergal Smith; Editing by Paul Simao)
