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Canadian dollar weakens 0.6% against the greenback
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Touches its weakest since April 12 at 1.3462
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Canadian housing starts fall 11% in March
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Canada-U.S. 2-year spread widens 5.7 basis points
(Adds dealer quotes and details throughout; updates prices)
TORONTO, April 19 (Reuters) - The Canadian dollar
weakened to a one-week low against its U.S. counterpart on
Wednesday as U.S. bond yields rose and domestic data showed
housing starts falling more than expected in March.
The loonie was trading 0.6% lower at 1.3462 to the
greenback, or 74.28 U.S. cents, its weakest level since last
Wednesday.
The decline for the currency came as oil settled 2.1% lower
at $79.16 a barrel, while investors turned more skeptical that
the Federal Reserve will cut interest rates later this year,
boosting the U.S. dollar against a basket of major
currencies.
"The USD came back today after a slight pause yesterday with
the help of stronger bond yields," said Tony Valente, senior FX
dealer at AscendantFX.
"This weighed on the CAD as the morning secession started
and was helped along with the worse-than-expected Canadian
housing starts for March."
Canadian housing starts fell 11% in March, contributing to a
slower trend in recent months that follows a rapid increase in
borrowing costs.
Separate data showed that Canadian producer prices rose by
0.1% in March from February but were down 1.8% on an annual
basis.
Still, the Canadian dollar is up 3% since hitting a
five-month low on March 10.
"All I'm seeing right now is a much-warranted correction,"
Valente said. "I suspect this correction will last right into
the FOMC's next meeting."
The Fed's Federal Open Market Committee is due to announce
its next interest rate decision on May 3.
Canadian government bond yields were higher across the
curve, tracking moves in U.S. Treasuries.
The 2-year rose 1.3 basis points to 3.891%, while
falling 5.7 basis points further below its U.S. counterpart to a
gap of about 38 basis points.
(Reporting by Fergal Smith; editing by John Stonestreet and
Jonathan Oatis)
