TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday, pulling back from an 11-day high the day before as domestic data showed lower factory shipments and the greenback broadly rose ahead of the release of Federal Reserve minutes.
Canadian factory sales fell by 0.4 percent in August from July on lower motor vehicle sales as a result of atypical assembly plant shutdowns, Statistics Canada said. Analysts had forecast a decrease of 0.6 percent.
The U.S. dollar .DXY rose to a one-week high against a basket of major currencies. Minutes of the Fed’s September meeting, due for release later on Wednesday, could help guide expectations for the number of additional interest rate hikes to expect from the central bank over the coming months.
The Bank of Canada has also been hiking interest rates. Economists expect the central bank to hike next week for the fifth time since July 2017, a Reuters poll showed.
They say that the country’s economy will continue to grow faster than its potential over the coming quarters as U.S. fiscal stimulus boosts demand for its exports.
At 9:22 a.m. (1322 GMT), the Canadian dollar CAD=D4 was trading 0.4 percent lower at 1.2986 to the greenback, or 77.01 U.S. cents.
The currency, which touched on Tuesday its strongest level since Oct. 5 at 1.2915, traded in a range of 1.2933 to 1.2989.
The decline for the loonie came as the price of oil, one of Canada’s major exports, slipped after three days of gains.
Markets awaited key U.S. inventory data expected to show a build in U.S. crude stockpiles. U.S. crude CLc1 prices were down 1.1 percent at $71.15 a barrel.
Canadian government bond prices were higher across a flatter yield curve, with the 10-year CA10YT=RR rising 16 Canadian cents to yield 2.483 percent.
Canadian inflation data for September and the August retail sales report are due on Friday.
Reporting by Fergal Smith; editing by Jonathan Oatis