CANADA FX DEBT-Canadian dollar hits near seven-month low on post-Fed momentum
By Fergal Smith
TORONTO, Nov 5 (Reuters) - The Canadian dollar weakened to a near seven-month low against its U.S. counterpart on Wednesday as doubts that the Federal Reserve would proceed with additional easing next month underpinned the greenback and after a key technical level was breached this week.
The loonie CAD= was trading 0.1% lower at 1.4115 per U.S. dollar, or 70.85 U.S. cents, after touching its weakest intraday level since April 9 at 1.4140.
The U.S. dollar .DXY held on to recent gains against a basket of major currencies, supported by stronger-than-expected U.S. private payroll data. Last Wednesday, Fed Chair Jerome Powell said a rate cut in December was not guaranteed in remarks after the U.S. central bank's latest policy easing.
"We believe there is some post-Fed momentum as the greenback has strengthened against most majors of late," said Sarah Ying, head of foreign exchange strategy at CIBC Capital Markets. "For USD-CAD, the move is likely technical in nature as we break above the 1.4080 resistance level."
The mid-October peak around 1.4080 for USD-CAD gave way on Tuesday.
A drop in the price of oil, one of Canada's major exports, added to headwinds for the Canadian currency. U.S. crude oil futures CLc1 settled 1.6% lower at $59.60 a barrel, weighed by concerns of a possible global oil glut.
Canada's services economy expanded in October for the first time in 11 months as businesses showed signs of adjusting to economic uncertainty, according to S&P Global's Canada services PMI data. The headline Business Activity Index rose to 50.5 last month from 46.3 in September.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 1.9 basis points at 3.153%.
Still, it fell 4.5 basis points further below the equivalent U.S. yield to a gap of about 100 basis points, which is the largest gap since June 24.
On Tuesday, Canada's budget projected the fiscal deficit will more than double this year.
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