The Canadian dollar steadied near a five-week low against its U.S. counterpart on Wednesday as oil prices fell, while investors looked ahead to domestic inflation data due later this week.
Loonie Performance
The Canadian dollar was trading nearly unchanged at 1.3635 to the U.S. dollar, or 73.34 U.S. cents, after touching its weakest level since April 10 at 1.3653. The currency has weakened about 1.5% since the start of May.
Oil prices, one of Canada's major exports, declined as concerns about global demand outweighed supply cuts from OPEC+. U.S. crude futures fell 0.9% to $78.42 a barrel.
Market Factors
The loonie has been under pressure as the U.S. dollar strengthened on expectations that the Federal Reserve will keep interest rates higher for longer. Meanwhile, the Bank of Canada is widely expected to begin cutting rates in June or July.
Canadian government bond yields edged lower across the curve, with the 10-year yield falling about 3 basis points to 3.432%. The yield has declined from a five-month high of 3.559% touched last week.
Investors are now focused on Canadian consumer price index data for April, due on Friday, which could provide more clarity on the timing of potential rate cuts.
