Canadian dollar hits a six-day low ahead of pivotal US inflation data
The loonie was trading 0.2% lower at 1.3784 per U.S. dollar, or 72.55 U.S. cents, after touching its weakest intraday level since last Tuesday at 1.3795.
The U.S. dollar (.DXY), opens new tab rose against a basket of major currencies, a day before the deadline for Washington and Beijing to strike a tariff deal and the release of U.S. consumer price index data that could help determine whether the Federal Reserve lowers borrowing costs next month.
"CAD remains tethered to USD direction," Amo Sahota, director at Klarity FX in San Francisco, said in a note.
Recent Canadian data has raised expectations for a Bank of Canada interest rate cut, but slow summer trading has limited the impact on the currency, Sahota said.
Canada's economy shed 40,800 jobs in July, giving back some of the substantial gains seen in the prior month, data on Friday showed. Investors see a 36% chance the BoC cuts rates at its next policy decision on September 17, up from 17% at the start of the month.
Also on Friday, data from the U.S. Commodity Futures Trading Commission showed that net short positions in the Canadian dollar have increased to 79,420 contracts, the highest since June, from 76,433 in the prior week.
The price of oil clawed back some of last week's steep decline, rising 0.5% to $64.18 a barrel. Oil is one of Canada's major exports.
Canadian bond yields edged lower across the curve. The 10-year was down nearly one basis point at 3.376%, after earlier touching its lowest level since July 4 at 3.353%.
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