TORONTO, Sept 10 (Askume) – The Canadian dollar weakened against the U.S. dollar on Tuesday as oil prices fell and the Bank of Canada said disruptions to global trade could make it harder to achieve its 2% inflation target.
The Canadian dollar fell 0.3% to $1.36, or 73.53 U.S. cents, after hitting its lowest intraday level since Aug. 23 at 1.3615.
“Cross-asset conditions were the key factor against the Canadian dollar today, with oil and stocks both lower, weighing on the Canadian dollar,” said Nick Rees, senior currency market analyst at Monex Europe Ltd.
Global stocks (.WORLD) fell due to the recent drop in the price of oil , one of Canada’s main exports.
US crude oil futures fell 3.6% to $66.23 a barrel as weak demand outlook and risks of a global supply glut continued to weigh on the market.
Bank of Canada Governor Steve Macklem said in a speech to the Canadian-British Chamber of Commerce in London that as globalization slows down, global commodity costs may not fall to the same extent, leading to a large increase in inflation.
However, in an interview with reporters, McCallum said that if economic growth is slower than expected, interest rates could be cut further. Last week, the central bank cut its benchmark interest rate by 25 basis points to 4.25% for the third time since June .
The dollar (.DXY) rose against a basket of major currencies ahead of the release of US inflation data on Wednesday , which could raise expectations for the pace of interest rate cuts from the Federal Reserve.
Canadian government bond yields are trending lower on a flat curve. The 10-year Treasury note fell 9.4 basis points to 2.916%, close to its lowest level in 16 months.
