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Canadian dollar weakens 0.3% against the greenback
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Wholesale trade falls 1.7% in February
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Price of U.S. oil settles 2.1% lower
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Ten-year yield touches highest level since March 10
(Adds analyst quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, April 17 (Reuters) - The Canadian dollar
weakened against its U.S. counterpart on Monday, giving back
some recent gains, as oil prices fell and investors weighed
prospects of additional interest rate hikes by the Federal
Reserve.
The U.S. dollar edged higher against a basket of
major currencies and U.S. Treasury yields climbed after a strong
New York manufacturing survey bolstered expectations the Fed
will raise interest rates next month.
"The market is trying to estimate what the Fed is going to
do with interest rates," said Rahim Madhavji, president at
KnightsbridgeFX.com. "The Canadian dollar had a pretty strong
run over the last several weeks ... Potentially the Canadian
dollar was getting a bit ahead of itself."
Additional Fed tightening could weigh on economic growth,
dampening demand for commodities. Canada is a major producer of
commodities, including oil, which settled 2.1% lower at $80.83 a
barrel.
The Canadian dollar was down 0.3% at 1.34 to the
greenback, or 74.63 U.S. cents, after trading in a range of
1.3343 to 1.3419. On Friday, it touched its strongest intraday
level in two months at 1.33.
Domestic data showed that wholesale trade decreased 1.7% in February from January and that foreign investors bought a net C$4.62 billion ($3.46 billion) in Canadian securities in February, led by corporate bonds. But Canada's consumer price index report for March, due to be released on Tuesday, could have more sway on the Bank of Canada policy outlook. It is expected to show that inflation slowed to an annual rate of 4.3% from 5.2% in February. Canadian government bond yields were up across the curve, tracking the move in U.S. Treasuries. The 10-year touched its highest since March 10 at 3.104% before dipping to 3.092%, up 5 basis points on the day. (Reporting by Fergal Smith; Editing by Paul Simao and Alison Williams)
