CANADA FX DEBT-Canadian dollar weakens as BoC and Fed resume easing campaigns

By Fergal Smith

TORONTO, Sept 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday in choppy trading as the Bank of Canada and the Federal Reserve resumed their interest rate cutting campaigns.

The loonie CAD= was trading 0.2% lower at 1.3765 per U.S. dollar, or 72.65 U.S. cents, after moving in a range of 1.3727 to 1.3787. The currency has traded in a roughly 1.3725-1.3925 range over the last few weeks.

The Bank of Canada reduced its key policy rate by 25 basis points to a three-year low of 2.5%, as expected, citing a weak jobs market and less concern about underlying pressures on inflation.

"The Bank of Canada dropped its previous forward guidance hinting at more cuts to come," Stephen Brown, deputy chief North America economist at Capital Economics, said in a note. "Nonetheless, Governor Tiff Macklem’s comments in the press conference support our view that the Bank will cut at least once more over its last two meetings of the year."

The overnight index swap market 0#CADIRPR sees a roughly 40% chance of another cut in October. Chances of a move by December are seen at about 75%.

The U.S. dollar .DXY seesawed against a basket of major currencies after the Fed also cut by 25 basis points and indicated it will steadily lower borrowing costs for the rest of this year.

The price of oil , one of Canada's major exports, settled 0.7% lower at $64.05 a barrel.

Canadian bond yields moved higher across the curve together with higher yields for U.S. Treasuries. The 10-year CA10YT=RR was up 3.5 basis points at 3.193% after earlier touching a four-month low at 3.127%.