TORONTO (Reuters) - The Canadian dollar weakened to a five-month low against its U.S. counterpart on Wednesday as oil prices declined and ahead of the potential signing of a new North American trade pact this week.
The agreement, reached at the end of September, reduced a source of uncertainty for Canadian businesses. But the potential benefit for Canada’s economy has been offset by a sharp decline in the price of oil, one of the country’s major exports.
Dairy remains a sticking point between the United States and Canada as the countries prepare to sign the U.S.-Mexico-Canada Agreement (USMCA), according to four sources familiar with the matter.
The price of oil was pressured on Wednesday by rising U.S. inventories and doubts over whether an OPEC-led output cut will be agreed next week. U.S. crude CLc1 prices were down 1.30 percent at $50.89 a barrel.
At 9:59 a.m. (1459 GMT), the Canadian dollar CAD=D4 was trading 0.3 percent lower at 1.3337 to the greenback, or 74.98 U.S. cents. The currency touched its weakest level since June 28 at 1.3344.
The loonie lost ground even as stocks were boosted by hopes of a trade truce between the United States and China at the G20 Summit.
The U.S. dollar .DXY edged higher against a basket of major currencies before a speech by Federal Reserve Chairman Jerome Powell that could provide clues on the path of interest rate hikes.
Canadian government bond prices were slightly higher across much of the yield curve, with the 10-year CA10YT=RR rising 6 Canadian cents to yield 2.331 percent.
The 10-year yield hit its lowest intraday since Sept. 13 at 2.313 percent.
Reporting by Fergal Smith; Editing by Susan Thomas