TORONTO, Sept 17 (Reuters) - The Canadian dollar steadied near a six-week low against its US counterpart on Thursday and bond yields fell, with a wider gap between the interest rates set by the Federal Reserve and the Bank of Canada helping to underpin the greenback.
The loonie was trading nearly unchanged at 1.3985 per US dollar, or 71.51 US cents, after touching its weakest intraday level since August 7 at 1.4001.
The Fed on Wednesday raised its benchmark interest rate by a quarter of a percentage point to the 3.75%-4.00% range and flagged further increases in borrowing costs in coming months. Earlier this month, the Bank of Canada left its key rate unchanged at 2.25%.
"The interest differential between the US and Canada is certainly providing the support for the US dollar," Darren Richardson, chief operating officer at Vantry Capital Inc, said in a note.
"The 1.40 level is a key technical level in the short term," Richardson added.
The price of oil, one of Canada's major exports, edged lower as reports of additional Saudi crude cargoes through Oman eased supply concerns. US crude oil futures were trading down 0.3% at $102.16 a barrel.
Domestic data showed that foreign investors bought a net C$20.65 billion ($14.76 billion) in Canadian securities in July, led by federal government bonds, following an upwardly revised C$41.25 billion total purchase in June, while Canadian investors sold a net C$30.63 billion worth of foreign securities.
The Canadian 10-year yield was down 9.3 basis points at 3.848%. It fell 4.7 basis points further below the equivalent US rate to a gap of about 111 basis points. That gap is the widest since June 2025.
Canada and Europe should ally to protect their markets, democracies and rule of law in a world dominated by the US and China, Canadian Prime Minister Mark Carney said, after an EU proposal to make Canada an "associate member."
Reporting by Fergal Smith; Editing by Paul Simao
