The Canadian dollar weakened for a fifth straight day against its U.S. counterpart on Tuesday as investors braced for a potential interest rate hike from the Federal Reserve and after domestic data showed home sales declining last month.
The loonie CAD= was trading 0.1% lower at 1.3915 per U.S. dollar, or 71.86 U.S. cents, after moving in a range of 1.3898 to 1.3929. Not since June has the currency weakened for five straight days.
Dollar strength, oil and domestic data weigh on loonie
"The focus has been definitely more on the U.S. dollar strength," said Darren Richardson, chief operating officer at Vantry Capital Inc. "That's based on the market anticipating that the Fed will increase interest rates tomorrow."
The U.S. dollar was firmer across the board as surging oil prices lifted Treasury yields and reinforced expectations that the Fed will hike interest rates on Wednesday.
U.S. crude oil futures CLc1 were trading 3.5% higher at $104.97 a barrel after attacks on Saudi Arabian energy infrastructure left the kingdom's East-West Pipeline offline. Oil is one of Canada's major exports.
Canadian home sales fell 0.7% month-over-month in August as increased mortgage rates and rising economic uncertainty weighed on activity.
The domestic economic outlook has been clouded by the recent escalation of a trade war between the United States and Canada.
Prime Minister Mark Carney unveiled a measure aimed at strengthening the economy, saying that Canada will let businesses immediately write off the cost of most new capital investments for tax purposes.
Canadian bond yields eased across a steeper curve. The 2-year was down 4.9 basis points at 3.351%, extending its pullback from a 2-year high during Monday's session at 3.437%.
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