Canadian dollar weakens to 2-week low as oil falls

Mon Aug 29, 2016 11:03am EDT
 
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TORONTO (Reuters) - The Canadian dollar weakened to a two-week low against its U.S. counterpart on Monday as oil fell, and the greenback drew support from heightened expectations of a U.S. interest rate hike as soon as September.

The odds of a Federal Reserve rate increase in September have climbed to 30 percent, up from 18 percent before senior Fed officials spoke on Friday, according to CME Group's FedWatch tool. [nL8N1BA1Y5]

Speaking in Jackson Hole, Wyoming, on Friday, Fed Chair Janet Yellen said the case for raising U.S. interest rates has strengthened in recent months. Fed Vice Chair Stanley Fischer later reinforced that message. [nS0N1AL00Y][nL1N1B711W]

Oil prices fell, pressured by high output from Middle East OPEC members and as a stronger U.S. dollar weighed on commodities. U.S. crude oil futures CLc1 were down 74 cents at $47.64 a barrel.

Oil is one of Canada's major exports.

At 9:12 a.m. EDT (1312 GMT), the Canadian dollar CAD=D4 was trading at C$1.3023 to the greenback, or 76.79 U.S. cents, weaker than Friday's close of C$1.3000, or 76.92 U.S. cents.

The currency's strongest level of the session was C$1.2971, while it touched its weakest since Aug. 11 at C$1.3029.

Speculators raised bullish bets on the Canadian dollar for the first week in four, Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions rose to 16,734 contracts in the week ended Aug. 23 from 12,473 contracts in the prior week.

Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR bond rose 2 Canadian cents to yield 0.597 percent and the benchmark 10-year CA10YT=RR climbed 22 Canadian cents to yield 1.069 percent.   Continued...

 
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.  REUTERS/Mark Blinch