CANADA FX DEBT-C$ holds near one-year low as investors weigh Fed outlook

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Canadian dollar gains 0.1% against the greenback

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Touches its weakest since October 2022 at 1.3899

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Canadian factory PMI rises to 48.6 in October

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Canadian bond yields ease across the curve

By Fergal Smith

TORONTO, Nov 1 (Reuters) – The Canadian dollar edged higher against the greenback on Wednesday, but was holding near an earlier one-year low as domestic data showed the factory sector remaining in contraction and the Federal Reserve left the door open to more rate hikes.

The loonie was trading 0.1% higher at 1.3865 to the greenback, or 71.12 U.S. cents, after touching its weakest intraday level since October 2022 at 1.3899.

The U.S. dollar held on to earlier gains against a basket of major currencies after the Fed held interest rates steady but didn’t rule out another rate increase.

“While Chair (Jerome) Powell has been evenhanded in his statements about whether the Fed needs to hike again, the strength of the economy has opened the door for another rate hike,” James Orlando, a senior economist at TD Bank, said in a note.

The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 48.6 in October from 47.5 in September.

While that was the highest since July, a reading below 50 indicates contraction in the sector. The PMI has been below that threshold since May, which is the longest such stretch since February 2016.

It follows data on Tuesday showing that the economy likely slipped into a shallow recession in the third quarter.

The price of oil, one of Canada’s major exports, settled 0.7% lower at $80.44 a barrel, while Canadian government bond yields fell across the curve, tracking moves in U.S. Treasuries.

The 10-year was down 10.8 basis points at 3.962%. (Reporting by Fergal Smith)