TORONTO (Reuters) - The Canadian dollar weakened against its broadly firmer U.S. counterpart on Wednesday as a wildfire threatened oil sands facilities in Alberta, while global oil prices seesawed.
Hot and dry weather and strong winds were expected to push a massive wildfire near Fort McMurray, Alberta eastward on Wednesday, threatening facilities and work camps in the prized oil sands region.
Economists had already been expecting a sharp slowdown in Canada’s economy after a strong start to 2016.
Lengthening the timeline for oil production to return to normal levels could add downside risk to the outlook, according to a research note on Wednesday from BMO Capital Markets, which projects flat growth in the second quarter.
Global oil prices seesawed after hitting 2016 highs in the previous session, as the impact of unplanned supply disruptions in Nigeria and Canada was tempered by rising supplies elsewhere. U.S. crude CLc1 prices were up 0.08 percent to $48.35 a barrel.
The U.S. dollar rose to a three-week high against a basket of major currencies after Federal Reserve officials on Tuesday played up chances of interest rate hikes this year. The focus now turns to the minutes from the last Federal Open Market Committee later on Wednesday.
At 9:25 a.m. EDT (1325 GMT), the Canadian dollar CAD=D4 was trading at C$1.2977 to the greenback, or 77.06 U.S. cents, weaker than Tuesday’s close of C$1.2903, or 77.50 U.S. cents.
The currency’s strongest level of the session was C$1.2903, while its weakest was C$1.2994. Last week it touched C$1.3016, its weakest in one month.
Foreign investment in Canadian securities climbed for a third straight month as foreigners bought a net C$17.17 billion ($13.25 billion) worth of securities in March, mainly in bonds, Statistics Canada said.
Canadian government bond prices were slightly lower across the maturity curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR price fell 4 Canadian cents to yield 0.607 percent, and the benchmark 10-year CA10YT=RR declined 5 Canadian cents to yield 1.324 percent.
The Canada-U.S. 10-year spread was 2.7 basis points more negative at -46.7 basis points, its largest gap since April 18.
Investors are awaiting Canadian wholesale trade for March, set for release on Thursday, while Canada’s March retail sales data and April inflation data are due on Friday. ECONCA
Reporting by Fergal Smith Editing by W Simon