TORONTO (Reuters) - The Canadian dollar weakened to a near six-week low against the greenback on Wednesday, on continued concerns over an interest rate cut following dovish comments by a senior Bank of Canada official on Tuesday.
At 3:40 p.m. (2040 GMT), the Canadian dollar CAD=D4 was trading 0.3% lower at 1.3304 to the greenback, or 75.17 U.S. cents. The currency touched its weakest intraday level since Oct. 10 at 1.3328.
On Tuesday, Bank of Canada Senior Deputy Governor Carolyn Wilkins said the global economy is facing immense challenges that could spill over into Canada and that the central bank has room to move interest rates lower.
“The real impetus is Wilkins’ comments yesterday, keeping concerns alive over a potential BoC cut in December or early 2020,” said Erik Nelson, a currency strategist at Wells Fargo in New York. “Then we had this latest run-up in USD-CAD amid some of the trade concerns.”
Canada’s central bank shifted to a more dovish stance in October as it cut its economic growth forecasts and expressing concern about global trade uncertainty.
Money markets see about a 20% chance of a Bank of Canada interest rate cut at the central bank’s next policy meeting on Dec. 4. Chances of a cut in January are seen at more than 50%. BOCWATCH
Worries that a “phase one” trade deal between Washington and Beijing may not be completed this year weighed on Wall Street.
Canada runs a current account deficit and is a major exporter of commodities, including oil, so its economy could be hurt by a slowdown in the global flow of capital or trade.
U.S. crude oil futures CLc1 rose more than 3% after a better-than-expected U.S. crude inventories report and as Russia said it would continue its cooperation with OPEC to keep the global oil market balanced.
Data from Statistic Canada showed that the country’s annual inflation rate held steady in October at 1.9% as expected, marking the third straight month of little change.
Bank of Canada Governor Stephen Poloz is due to speak on Thursday on economic change.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 1 Canadian cent to yield 1.512% and the 10-year CA10YT=RR was up 16 Canadian cents to yield 1.428%.
The 10-year yield touched its lowest intraday level since Oct. 10 at 1.394%.
Reporting by Fergal Smith; Editing by Steve Orlofsky and Leslie Adler