(Adds strategist quotes and details throughout; updates prices)
* Loonie touches its weakest since Sept. 21 at 1.2837
* Price of U.S. oil settles 5.4% lower
* Canada’s economy grows 5.4% in the third quarter
* Canadian bond yields trade mixed across a flatter curve
By Fergal Smith
TORONTO, Nov 30 (Reuters) – The Canadian dollar weakened to
its lowest level in 10 weeks against its U.S. counterpart on
Tuesday as hawkish comments from Federal Reserve Chair Jerome
Powell offset data showing stronger than expected growth in the
domestic economy.
Wall Street’s main indexes extended declines in choppy
trading after Powell said the risk of higher inflation has
increased and that it was appropriate to consider wrapping up
tapering a few months sooner.
“The idea of a Federal Reserve speeding up its normalisation
cycle at a time when global growth is subject to such a downside
risk provides a nasty mix for pro-cyclical currencies like the
loonie,” said Simon Harvey, senior FX market analyst for Monex
Europe and Monex Canada.
Canada is a major exporter of commodities, including oil, so
the loonie tends to be sensitive to shifts in the economic
cycle.
Oil tumbled after the CEO of drugmaker Moderna cast
doubt on the efficacy of COVID-19 vaccines against the Omicron
coronavirus variant.
U.S. crude oil futures settled down 5.4% at $66.18 a
barrel, while the Canadian dollar was trading 0.4% lower at
1.2787 to the greenback, or 78.20 U.S. cents. The currency
touched its weakest intraday level since Sept. 21 at 1.2837.
For the month, the loonie was down 3.1%, its biggest decline
since March 2020.
Canada’s economy grew 5.4% in the third quarter on an
annualized basis, beating analyst expectations, and growth most
likely accelerated in October on a manufacturing rebound,
Statistics Canada data showed.
Canadian government bond yields were mixed across a flatter
curve, tracking the move in U.S. Treasuries.
The 2-year rate rose 3.2 basis points to 0.991%,
while the 10-year hit its lowest intraday level
since Oct. 7 at 1.503% before recovering to 1.563%, down 5.1
basis points on the day.
(Reporting by Fergal Smith
Editing by Nick Zieminski)
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Keywords: CANADA FOREX/ (UPDATE 1)
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