Canadian dollar underperforms most G10 currencies as oil falls
USO•The Canadian dollar steadied at 1.4135 per US dollar but underperformed most G10 currencies as oil prices fell and Canadian jobs data tempered expectations for Bank of Canada rate hikes. Investors see about a 40% chance of a December hike, versus 84% for the Federal Reserve.
1. Currency and jobs data
The Canadian dollar was barely changed at 1.4135 per US dollar, near an 18-day low, and was one of only two G10 currencies that did not gain against the greenback. Canadian employment fell for a third straight month in October, and the jobless rate rose to a six-month high of 6.7%; US data showed accelerating job growth.
2. Rate expectations and oil
Investors see roughly a 40% chance of a Bank of Canada rate hike in December, compared with an 84% chance of a Federal Reserve hike. Strategists at TD Securities said diverging employment data will likely keep USD-CAD above 1.40. US crude futures fell 3.5% to $87.64 a barrel after Donald Trump played down the likelihood of renewed strikes on Iran.
3. Bond yields and meeting minutes
Canadian government bond yields were mixed. The 10-year yield was down about half a basis point at 3.653%, after touching a nearly three-month low of 3.608% on Friday. Minutes from the Bank of Canada's October meeting, when it raised rates for the first time in three years, were due Tuesday.
