The Canadian dollar weakened to a near six-month low against its U.S. counterpart on Thursday as the greenback benefited from safe-haven demand and ahead of domestic jobs data that could support additional Bank of Canada interest rate cuts.
The loonie (CADUSD) was trading 0.5% lower at 1.4020 per U.S. dollar, or 71.33 U.S. cents, after touching its weakest intraday level since April 10 at 1.4025. The move took USD-CAD above its 200-day moving average at 1.3977.
“A fresh wave of USD buying this morning drove the USD-CAD up to 1.40,” said Kevin Ford, FX & macro strategist at Convera, adding that penetration of both the 200-day moving average and the 1.40 psychological level contributed “technical weight to the move.”
Round numbers often attract large orders, causing them to be major levels of resistance or support.
“A flight to safe-haven assets, led by the U.S. dollar and precious metals, has pressured G10 currencies broadly lower against the greenback,” Ford said.
The U.S. dollar added to this week’s gains against a basket of major currencies, helped by recent concerns about looser monetary policy in Japan and political uncertainty in France.
The price of oil, one of Canada’s major exports, was trading 1.8% lower at US$61.43 a barrel after Israel and the Palestinian militant group Hamas signed an agreement to a ceasefire in Gaza.
Canada’s employment report for September, due on Friday, is expected to show the economy adding 5,000 jobs and the unemployment rate increasing to 7.2%.
Investors see a 64% chance the BoC would lower interest rates at its next policy announcement on October 29 to support the economy. Last month, the central bank cut its benchmark rate by a quarter of a percentage point to 2.50%.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 1.7 basis points at 3.208%.