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PrintCANADA FX DEBT-Canadian dollar lags G10 peers as investors eye more rate cuts
BY Reuters | ECONOMIC | 10/24/24 02:16 PM EDT*
Canadian dollar weakens 0.1% against the greenback
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Touches its weakest since Aug. 5 at 1.3868
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Price of US oil falls 1%
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10-year yield eases 3.5 basis points
By Fergal Smith
TORONTO, Oct 24 (Reuters) - The Canadian dollar edged down to an 11-week low against its U.S. counterpart on Thursday as investors bet the Bank of Canada would need to cut interest rates further to bolster a sluggish domestic economy.
The loonie was trading 0.1% lower at 1.3850 to the U.S. dollar, or 72.20 U.S. cents, after touching its weakest level since Aug. 5 at 1.3868.
It was the only Group of 10 currency to lose ground against the U.S. dollar, which was giving back some of its recent gains as U.S. bond yields fell.
The Canadian central bank has cut its benchmark interest rate by 125 basis points since June to 3.75%. Its easing campaign included a half-percentage-point reduction on Wednesday, the first cut of that size in 15 years outside of the pandemic.
"The Bank of Canada cut 50 basis points but it didn't grasp the challenges facing the Canadian economy," said Adam Button, chief currency analyst at ForexLive.
"The market might be looking further out and saying, 'this isn't enough. Rates are still too high for where the economy is now.'"
The BoC's annual economic-growth forecast is overly optimistic, economists said, and another large interest-rate cut this year will likely be required to boost growth.
Investors are betting the BoC will lower the policy rate a further 100 basis points by September, which would leave it in the middle of the 2.25%-3.25% range the central bank estimates as a neutral setting that neither restricts nor stimulates the economy.
The price of oil, one of Canada's major exports, was trading nearly 1% lower at $70.10 a barrel on worries that slow economic growth in Europe could reduce energy demand.
Canadian bond yields were mixed across a flatter curve, with the 10-year down 3.5 basis points at 3.230%. (Reporting by Fergal Smith; Editing by Rod Nickel)
