TORONTO, March 20 (Reuters) - The Canadian dollar clawed back its earlier decline against the U.S. dollar on Thursday as oil prices rose and investors weighed comments by Bank of Canada Governor Tiff Macklem for clues that the central bank might pause its interest rate cutting campaign.
The loonie was nearly unchanged at 1.4325 per U.S. dollar, or 69.81 U.S. cents, after touching its weakest intraday level since last Friday at 1.4401.
Macklem said the uncertainty over the effect of U.S. tariffs meant it had to change the way it conducted monetary policy to become less-forward looking than normal, adding that there could be no doubt about the bank's commitment to low inflation.
"That's in line with the hawkish pivot we have seen from the Bank of Canada in recent weeks and reinforces our call for policymakers to hold rates steady in April," Royce Mendes, managing director and head of macro strategy at Desjardins, said in a note.
Investors see a roughly 64% chance the BoC moves to the sidelines at its next policy decision on April 16.
Canadian small business confidence, opens new tab tumbled this month to an all-time low as the trade war heated up, data from the Canadian Federation of Independent Business showed.
Still, the Canadian government bond market is unlikely to return to the record outperformance against U.S. bonds seen in February, as investors are now betting the trade war will slow the U.S. economy as well as hurt Canada's growth.
The U.S. dollar (.DXY), opens new tab rose against a basket of major currencies after the Federal Reserve indicated that it was in no rush to cut rates further this year.
The price of oil , one of Canada's major exports, was trading 1.6% higher at $68.24 a barrel, supported by a higher-than-expected fuel inventory drawdown in the United States.
The Canadian 10-year yield was up half a basis point at 3.008%.
Reporting by Fergal Smith; editing by Diane Craft
