CANADA FX DEBT-Canadian dollar steadies as Powell leaves door open to Fed rate cuts

By Fergal Smith

TORONTO, Oct 14 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Tuesday, recovering from a six-month low, as the prospect of additional Federal Reserve interest rate cuts offset lower oil prices.

The loonie CAD= was nearly unchanged at 1.4034 per U.S. dollar, or 74.21 U.S. cents, after touching its weakest intraday level since April 10 at 1.4079.

Wall Street stocks rose and the U.S. dollar lost ground against a basket of major currencies. Federal Reserve Chair Jerome Powell said policymakers will take a "meeting-by-meeting" approach to any further rate cuts as they balance job market weakness with inflation that remains well above their 2% target.

"Powell didn't push back against market expectations of rate cuts at the final two meetings of the year," Sal Guatieri, a senior economist at BMO Capital Markets, said in a note.

"Barring a particularly bad (U.S.) CPI release on October 24, or a sharp improvement in some labour market indicators, there's little reason for the FOMC not to continue normalizing policy by trimming rates again."

U.S. crude futures CLc1 settled 1.3% lower at $58.70 a barrel as the International Energy Agency warned of a huge supply glut in 2026, and as U.S.-China trade tensions persisted. Oil is one of Canada's major exports.

Domestic data had little market impact. The value of building permits issued fell 1.2% in August from July, hitting the lowest level since June 2024.

Canadian bond yields fell across the curve, tracking moves in U.S. Treasuries, as the Canadian bond market reopened following the Thanksgiving Day holiday.

The 10-year yield CA10YT=RR was down 2.4 basis points at 3.145%, after touching its lowest level since May 8 at 3.124%.