The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices dipped and investors awaited a speech by Bank of Canada Governor Tiff Macklem that could help guide expectations for the pace of additional interest rate hikes. The loonie was down 0.5% at 1.3684 to the greenback, or 73.08 U.S. cents, after trading in a range of 1.3565 to 1.3690. Money markets have fully discounted a 25-basis-point hike at the BoC's next policy announcement on Oct. 26 and see a roughly 50% chance of a larger increase of 50 basis points.
The Canadian dollar is set to fall short of a September forecast for the coming year following sharp losses in recent weeks and as interest rate hikes by the Bank of Canada threaten to push the domestic economy into recession, a Reuters poll showed. The currency has weakened around 7% against the U.S. dollar since the start of 2022, but has fared better than other G10 currencies except for the Swiss franc, although most of that decline has come since mid-August. Last Friday, it touched its weakest level in more than two years at 1.3838 per U.S. dollar, or 72.26 U.S. cents.
Watch: Karl Schamotta expects the loonie to head toward 70 cents