Canadian dollar weakens against firmer greenback ahead of Poloz speech

TORONTO (Reuters) - The Canadian dollar weakened against its broadly firmer U.S. counterpart on Tuesday ahead of a speech by Bank of Canada Governor Stephen Poloz and as oil prices dipped.

U.S. and Canada Dollar notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

At 9:21 a.m. ET (1421 GMT), the Canadian dollar CAD=D4 was trading at C$1.2777 to the greenback, or 78.27 U.S. cents, down 0.6 percent.

The currency traded in a range of C$1.2703 to C$1.2783. On Monday, it touched its strongest in 12 days at C$1.2701.

Poloz will discuss central banks’ ability to understand inflation, with investors looking for clues on the timing of further interest rate increases.

The Bank of Canada is expected to hold rates steady in December after raising them twice earlier this year. But data last Friday showing unexpected strength in the nation's job market has supported expectations of increases next year. BOCWATCH

The central bank will release Poloz’s prepared remarks at 12:55 p.m. ET (1755 GMT) and the governor will hold a press conference at 2 p.m. ET.

The U.S. dollar .DXY gained against a basket of major currencies as investors added bets that monetary policy will continue to diverge between the United States and the euro zone and as buoyant risk appetite weighed on the safe haven Japanese yen JPY= and Swiss franc CHF=. [nL3N1ND4EK]

Prices of oil, one of Canada’s major exports, eased after having risen the most in six weeks the previous day as the Saudi crown prince tightened his grip on power, and tensions flared between Saudi Arabia and Iran. [nL3N1ND1H9]

U.S., Mexican and Canadian officials will kick off some of the next round of talks to rework the North American Free Trade Agreement slightly ahead of schedule on Nov. 15, four officials familiar with the process said on Monday. [nL1N1NC259]

Canada sends about 75 percent of its exports to the United States and its economy could suffer if NAFTA collapses.

Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 3 Canadian cents to yield 1.404 percent and the 10-year CA10YT=RR rising 16 Canadian cents to yield 1.908 percent, the lowest since Sept. 6.

Pricing is expected today for a new global issue by the government of Canada of U.S. dollar-denominated bonds that mature in November 2022, Thomson Reuters IFR said.

Reporting by Fergal Smith; Editing by Steve Orlofsky