November 30, 2017 / 3:10 PM / in 18 days

Canadian dollar hits four-week low as oil prices gyrate on OPEC decision

TORONTO (Reuters) - The Canadian dollar weakened to a four-week low against its U.S. counterpart on Thursday as oil prices gyrated and data showed a widening in the country’s current account deficit.

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

Canada’s current account deficit swelled in the third quarter to C$19.35 billion, the third largest in history, as the country’s international trade gap in goods continued to expand.

“The current account numbers were a reminder of a long term headwind for the Canadian economy,” said Adam Button, currency analyst at ForexLive in Montreal.

“The Canadian dollar was whipped around by uncertainty on the OPEC decision and the U.S. tax bill,” Button said.

U.S. crude CLc1 prices clawed back earlier losses to settle up 0.2 percent at C$57.40 a barrel after OPEC and non-OPEC producers led by Russia agreed to extend output cuts until the end of 2018.

Oil is one of Canada’s major exports.

U.S. Treasury yields rose on optimism about U.S. tax overhaul efforts, but the greenback .DXY pared some of this week’s gains against a basket of major currencies.

At 4 p.m. (2100 GMT), the Canadian dollar CAD=D4 was trading at C$1.2902 to the greenback, or 77.51 U.S. cents, down 0.3 percent.

The currency’s strongest level of the session was C$1.2851, while it touched its weakest since Nov. 1 at C$1.2909.

For the month, the loonie dipped 0.1 percent.

Separate domestic data showed that Canadian average weekly earnings rose 1 percent in September from August.

Data on Canada’s jobs for November and gross domestic product for the quarter will be released on Friday. That could help guide expectations for next week’s interest rate decision by the Bank of Canada.

The central bank raised rates in July and September for the first time in seven years but has since turned more cautious on the outlook for the economy.

Canadian government bond prices were mixed across the yield curve, with the two-year CA2YT=RR up 1 Canadian cent to yield 1.431 percent and the 10-year CA10YT=RR falling 7 Canadian cents to yield 1.889 percent.

The gap between Canada’s 2-year yield and its U.S. equivalent widened by 3.3 basis points to a spread of -35.9 basis points, its widest since June 27.

Reporting by Fergal Smith; Editing by Meredith Mazzilli and Peter Cooney

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