Canadian dollar hits 4-week low on lower oil prices

·2 min read
A Canadian dollar coin, commonly known as the "Loonie," is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar weakened to a four-week low against its U.S. counterpart on Wednesday, as worries about the global economic outlook pressured commodity prices and investors assessed minutes from the Bank of Canada's recent policy decision.

The loonie was trading 0.1% lower at 1.3645 to the greenback, or 73.29 U.S. cents, after touching its weakest level since March 28 at 1.3651.

A number of factors have weighed on the currency, including a dip in risk appetite and lower commodity prices, said Amo Sahota, director at Klarity FX in San Francisco.

"Concerns of softening demand for commodities as the world considers recession risks have weighed on commodity prices and the Canadian dollar," Sahota said.

Canada is a major producer of commodities, including oil. U.S. crude oil futures settled 3.6% lower at $74.30 a barrel as new orders for key U.S.-manufactured capital goods fell more than expected in March and shipments declined.

Domestic data was more upbeat. Factory sales rose 0.7% in March from February, largely driven by transportation equipment, according to a preliminary estimate from Statistics Canada.

The Bank of Canada did not hike interest rates earlier this month because it wanted to see more evidence of the effects of previous monetary tightening on growth and inflation, a summary of deliberations from the policy meeting showed.

Canadian inflation excluding food and energy costs is expected to remain above 3% until the fourth quarter of this year, the median forecast of seven economists surveyed by Reuters showed, which could dash hopes of an early BoC shift to cutting interest rates.

Canadian government bond yields were higher across the curve, recouping some of the previous day's decline. The 10-year rose 3.9 basis points to 2.849%.

(Reporting by Fergal Smith)