TORONTO, Sept 10 (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Tuesday as oil prices fell and the Bank of Canada said global trade disruptions could make it harder for the central bank to consistently meet its 2% inflation target.
The loonie was trading 0.3% lower at 1.36 to the U.S. dollar, or 73.53 U.S. cents, after touching its weakest intraday level since Aug. 23 at 1.3615.
“Cross-asset conditions are in the driving seat for USD-CAD today, with both falls for oil and equities conspiring to weigh on the loonie,” said Nick Rees, a senior FX market analyst at Monex Europe Ltd.
Global shares (.WORLD), opens new tab edged down and the price of oil, one of Canada’s major exports, extended its recent declines.
U.S. crude oil futures were trading 3.6% lower at $66.23 a barrel as a weaker demand outlook and risks of global oversupply continued to weigh on the market.
With globalization slowing, the cost of global goods might not decline to the same degree, and this could put more upward pressure on inflation, Bank of Canada Governor Tiff Macklem said in a speech to the Canada-UK Chamber of Commerce in London.
Still, speaking with reporters, Macklem left the door open to larger interest rate cuts if growth falls short of expectations. The BoC last week cut its benchmark rate for the third time since June, lowering it by 25 basis points to 4.25%.
The U.S. dollar (.DXY), opens new tab rose against a basket of major currencies ahead of U.S. inflation data on Wednesday that could guide expectations for the pace of expected rate cuts by the Federal Reserve.
