*
Canadian dollar weakens 1% against the U.S. dollar
*
Touches its weakest since Nov. 3 at 1.3762
*
Price of U.S. oil settles 3.6% lower
*
2-year yield rises 7.1 basis points
(Adds strategist quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, March 7 (Reuters) - The Canadian dollar
weakened to a four-month low against its U.S. counterpart on
Tuesday as a hawkish shift by Federal Reserve Chair Jerome
Powell rattled Wall Street and ahead of a Bank of Canada
interest rate decision this week.
The loonie was trading 1% lower at 1.3750 to the
U.S. currency, or 72.73 U.S. cents, its biggest decline since
Sept. 30. The currency touched its weakest level since Nov. 3 at
1.3762.
"It was basically a broad-based USD rally that drove the CAD
weakness today," said George Davis, chief technical strategist
at RBC Capital Markets. "The move above 1.3705 took out a double
top from last December and provided additional momentum."
A double top is a technical chart pattern indicating the
reversal of a previous trend.
The U.S. dollar rallied against a basket of major
currencies, while U.S. stock indexes and the price of oil , one of Canada's major exports, fell as Powell said the
Fed will likely need to raise interest rates more than expected
as it seeks to rein in inflation.
U.S. crude oil futures settled 3.6% lower at $77.58 a
barrel.
The Bank of Canada is due to make a policy decision on
Wednesday.
The central bank will keep its key interest rate on hold at
4.50% for the rest of this year, according to economists polled
by Reuters, who said the bank was more likely to sound a hawkish
tone than dovish as inflation remains a worry.
Canadian government bond yields were mixed across a flatter
curve, tracking the move in U.S. Treasuries. The 2-year rose 7.1
basis points to 4.330%, while the 10-year was down
2.5 basis points at 3.336%.
(Reporting by Fergal Smith; Editing by Jane Merriman and Will
Dunham)
