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Canadian dollar falls 0.2% against the greenback
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Touches its weakest level since Oct. 21 at 1.3837
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Price of U.S. oil settles 1.2% lower
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Canadian bond yields ease across curve
(Adds analyst quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, March 9 (Reuters) - The Canadian dollar
weakened to a near five-month low against its U.S. counterpart
on Thursday, as investors turned cautious ahead of a key U.S.
employment report and eyed diverging policy between the Bank of
Canada and the Federal Reserve.
The loonie was trading 0.2% lower at 1.3825 to the
greenback, or 72.33 U.S. cents, after touching its weakest level
since Oct. 21 at 1.3837.
The move came ahead of the release of U.S. and Canadian
employment reports on Friday.
"It's an old-fashioned flight to safety in markets," said Adam Button, chief currency analyst at ForexLive. "The market is scared of the non-farm payrolls tomorrow. Another hot jobs report is going to push the Federal Reserve towards 6% rates." Markets have been on edge in recent days as Fed Chair Jerome Powell delivered a message of higher and potentially faster rate hikes. Investors are betting that the sensitivity of Canada's economy to higher borrowing costs will result in a historically large gap between the tightening campaigns of the BoC and the Fed. "Rate hikes aren't biting in the U.S. like they appear to be in Canada," Button said. The BoC needs more evidence to gauge if interest rates are high enough to tame inflation, in part because the economies of major trading partners are doing better than forecast, Senior Deputy Governor Carolyn Rogers said. On Wednesday, the BoC left its benchmark interest rate on hold at 4.50%. The price of oil, one of Canada's major exports, settled 1.2% lower on Thursday at $75.72 a barrel. Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 2-year eased 11.8 basis points to 4.166% after touching on Wednesday its highest level since October 2007 at 4.370%. (Reporting by Fergal Smith; Editing by Paul Simao By Alistair Bell)
