CANADA FX DEBT-Canadian dollar weakens as Fed re-pricing runs its course
By Fergal Smith
TORONTO, Oct 30 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday as the greenback posted broad-based gains, but the move was limited as the boost to the U.S. currency from a more hawkish Federal Reserve began to fade.
The loonie CAD= was trading 0.3% lower at 1.3980 per U.S. dollar, or 71.53 U.S. cents, after moving in a range of 1.3928 to 1.4014.
"We saw USD-CAD briefly trade above the 1.4000 threshold today as the market continued to re-price Fed rate expectations after a more hawkish tone from Fed Chair Powell yesterday," said George Davis, chief technical strategist at RBC Capital Markets.
"With that largely running its course, we’ve come off of the highs ... The USD remains relatively firm, so it feels like USD/CAD will find some support near 1.3950."
The U.S. dollar .DXY rose against a basket of major currencies as the Bank of Japan adopted a less hawkish tone than traders expected. On Wednesday, Fed Chair Jerome Powell said an interest rate cut in December was not guaranteed, giving the greenback a boost.
The Bank of Canada also gave guidance on Wednesday that was more hawkish than expected. The bank signaled a potential end to its easing campaign after lowering its benchmark rate to a three-year low of 2.25%.
Canadian Prime Minister Mark Carney will meet with Chinese President Xi Jinping on Friday in South Korea. Carney arrived in Asia earlier this week in an effort to deepen trade and security ties in the region, at a time when Canada is struggling to lessen its dependence on the U.S. and seek new markets.
The price of oil CLc1, one of Canada's major exports, rose 0.5% to $60.75 a barrel as investors assessed a potential trade truce between the United States and China.
The Canadian 10-year yield CA10YT=RR pulled back from an earlier near three-week high at 3.181% to trade 2.5 basis points lower at 3.133%.
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