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Canadian dollar weakens 0.4% against greenback
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Touches weakest level since Oct. 21 at 1.3794
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Bank of Canada leaves key rate unchanged at 4.50%
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Canada-U.S. 2-year spread widens further
(Updates market prices and details on activity)
By Fergal Smith
TORONTO, March 8 (Reuters) - The Canadian dollar
weakened on Wednesday to a near five-month low against its U.S.
counterpart, as the Bank of Canada paused its tightening
campaign in a move that contrasted with the Federal Reserve's
shift this week to a more hawkish message.
The Bank of Canada left its key overnight interest rate on
hold at 4.50%, as expected, becoming the first major central
bank to move to the sidelines in the face of an anticipated
easing of high inflation.
"So right now they are data dependent, assessing the lagged
impact of hikes already put through," said Darcy Briggs, a
portfolio manager at Franklin Templeton Canada.
Federal Reserve Chair Jerome Powell reaffirmed his message
from Tuesday of higher and potentially faster interest rate
hikes. The hawkish message has boosted the U.S. dollar against a basket of major currencies, including the loonie.
The Canadian dollar was trading 0.4% lower at 1.38 to
the greenback, or 72.46 U.S. cents, after touching its weakest
level since Oct. 21 at 1.3815.
Meanwhile, economic data showed that Canada recorded a
surprise trade surplus of C$1.9 billion ($1.4 billion) in
January, driven by broad-based gains in exports.
Canada's key export, oil , settled down 1.2% at $76.66
a barrel, extending the previous day's losses.
Canadian government bond yields were lower across a flatter curve. The 2-year eased 1.9 basis points to 4.308%, while the 10-year was down 4 basis points at 4.278%. The 2-year fell 7.2 basis points further below its U.S. equivalent to a gap of about 76 basis points, its biggest since April 2019. (Reporting by Fergal Smith; Editing by Bernadette Baum, Paul Simao and Diane Craft)
