CANADIAN DOLLAR WEAKENS AHEAD OF BOC RATE DECISION, 10-YEAR YIELD HITS A 2-YEAR HIGH
By Fergal Smith
TORONTO, Sept 1 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as investors bet on a Federal Reserve interest rate hike next month, while a sell-off in global bond markets helped underpin domestic borrowing costs ahead of a Bank of Canada interest rate decision.
The loonie was trading 0.4% lower at 1.3905 per U.S. dollar, or 71.92 U.S. cents, putting it among the biggest decliners in the Group of 10 currencies.
• "The loonie is clearly a laggard in G10 FX today as traders continue to increase bets that the Fed will have to raise interest rates in September to meet its 2% target," said Amo Sahota, director at Klarity FX in San Francisco.
• "Meanwhile the BoC is expected to remain on hold tomorrow at 2.25%, but may introduce a slightly more dovish tone given the escalation in the trade war with the U.S.," Sahota said.
• The U.S. needs to start being serious and stop trying to be tough before talks on a possible trade deal with Canada can restart, Prime Minister Mark Carney told reporters.
• Investors expect the Bank of Canada to leave its benchmark interest rate on hold at 2.25% on Wednesday despite recent GDP data that showed the economy growing at a faster pace than the central bank had forecast.
• Canada's manufacturing sector expanded for a fifth straight month in August as output and employment rose but increased trade tensions cast doubt on the pace of growth being sustained, data on Tuesday showed.
• The price of oil, one of Canada's major exports, rose to a near six-week high as a resumption in fighting between the United States and Iran in the Middle East renewed fears of supply disruptions from the oil-producing region. U.S. crude oil futures were trading 4.4% higher at $89.53 a barrel.
• The Canadian 10-year yield was up 1.5 basis points at 3.754%, after earlier touching its highest level since May 2024 at 3.790%.
(Reporting by Fergal Smith; Editing by Alistair Bell)
2026-09-01T17:42:58Z
