TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Wednesday, hovering near a three-month low hit last week, as investors braced for an interest rate decision from the Federal Reserve.
The loonie has fallen 6.5 percent since early September, pressured by a more dovish tone from the Bank of Canada after it hiked rates in July and September for the first time in seven years.
On Tuesday, data showed a surprise contraction in the Canadian economy in August and Bank of Canada Governor Stephen Poloz said Canada is at a “crucial” spot in the economic cycle with significant uncertainties clouding the way forward.
The central bank’s caution has overshadowed a nearly 10-month high for the price of oil, one of Canada’s major exports.
U.S. crude CLc1 prices were up 0.97 percent to $54.91 a barrel as data showed OPEC has significantly improved compliance with its pledged supply cuts and Russia is also widely expected to keep to the deal.
The U.S. dollar .DXY climbed against a basket of major currencies ahead of the Fed decision.
The U.S. central bank is expected to keep rates unchanged as speculation swirls on who will be its next leader, but will likely point to a firming economy as it edges closer to a possible rate increase next month.
At 9:08 a.m. ET, the Canadian dollar CAD=D4 was trading at C$1.2905 to the greenback, or 77.49 U.S. cents, down 0.1 percent.
The currency traded in a range of C$1.2872 to C$1.2908. On Friday, it touched its weakest in more than three months at C$1.2916
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries after data showed U.S. companies added the most workers in seven months in October, and as corporate earnings helped boost Wall Street shares.
Reporting by Fergal Smith; Editing by Meredith Mazzilli
Our Standards: The Thomson Reuters Trust Principles.