Canada's currency fell againstthe U.S. dollar on Wednesday as traders overseas got a chanceto react to the Bank of Canada warning that a strong domesticcurrency was undermining economic recovery.
A slide in the price of oil, a key Canadian export, toward$78 a barrel given a bigger-than-expected increase in crude oilinventories was also weighing on the currency.
It was enough to send Canada's dollar down to C$1.0578 tothe U.S dollar, or 94.654 U.S. cents, its lowest since Oct. 8.The slide followed a drop of near 2 U.S. cents on Tuesday whenthe Bank of Canada suggested it will not follow Australia inhiking interest rates quickly.
You do have this little matter of the Bank of Canada,which London didn't get a chance to react to that much yesterday, said David Watt, senior currency strategist at RBC Capital Markets.
We're also in the period between the Bank of Canada statement and the MPR, when the market has to reassessif it missed something. On Thursday, the Bank of Canada will release it Monetary Policy Report, followed by a news conference with Governor MarkCarney.
At 7:40 a.m. (1140 GMT), the Canadian unit was at C$1.0575to the U.S. dollar, or 94.56 U.S. cents, down from C$1.0508 tothe U.S. dollar, or 95.17 U.S. cents, at Tuesday's close.
Domestic bond prices, with no Canadian data to consider,were stuck lower across the curve alongside a weaker U.S.Treasury market.