Canadian dollar slides on wave of U.S. dollar buying
By Fergal Smith
TORONTO (Reuters) - The commodity-linked Canadian dollar weakened against its U.S. counterpart on Wednesday as the greenback broadly climbed and domestic data showed exports falling in August, with the loonie losing ground despite higher oil prices.
The Canadian dollar was down 0.7% at 1.36 to the greenback, or 73.53 U.S. cents, after trading in a range of 1.3504 to 1.3695. The currency was pulling back from its strongest intraday level in 11 days on Tuesday at 1.3501.
"It appears to be a wave of broad U.S. dollar buying," said Erik Nelson, a currency strategist at Wells Fargo in New York. "Notably the rebound in oil prices and equities is providing only minimal support to the Canadian dollar here against a resilient greenback."
The U.S. dollar rallied against a basket of major currencies as data showed that U.S. private employers stepped up hiring in September and the Reserve Bank of New Zealand lifted interest rates to a seven-year high, promising more pain to come.
The stance of New Zealand's central bank contrasted with a dovish turn by the Reserve Bank of Australia on Tuesday, which helped boost investor sentiment globally on hopes other central banks would ease off on tightening.
The RBNZ's move dispelled "some expectation of a central bank rate pivot," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.
Canada's trade surplus narrowed to C$1.5 billion ($1.1 billion) in August as exports dropped 2.9%.
One of Canada's major exports is oil. It added to its gains in recent days as OPEC+ agreed to its deepest cuts to production since the 2020 COVID-19 pandemic.
U.S. crude prices settled 1.4% higher at $87.76 a barrel, while Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries.
The 10-year rose 14.9 basis points to 3.277%.
(Reporting by Fergal Smith; Editing by Andrea Ricci and Jonathan Oatis)
