The Canadian dollar CADUSD was little changed against the greenback on Tuesday, with the currency giving back its earlier gains as domestic data showed factory activity decreasing for a third month and investors awaited a Federal Reserve policy decision.
The loonie was trading nearly unchanged at 1.3620 to the greenback, or 73.42 U.S. cents, after moving in a range of 1.3531 to 1.3667.
“Right now it’s all about macro factors that are in play,” said Bipan Rai, North America head of FX Strategy at CIBC Capital Markets.
“The big event for this week is going to happen tomorrow, with respect to the Fed decision and whether or not to hike rates by 75 basis points.”
Wall Street’s main indexes fell after data pointing to strength in the labour market dented hopes the Fed would signal an easing in the pace of its interest rate hikes following an expected three-quarters of a percentage point increase at a policy announcement on Wednesday.
The Bank of Canada has already downshifted the pace of its tightening at an interest rate decision last week. BoC Governor Tiff Macklem is due to appear before a Canadian Senate committee at 6:30 p.m. ET (2230 GMT).
The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 48.8 in October from 49.8 in September as production and new orders declined.
The price of oil, one of Canada’s major exports, rallied on optimism that China, the world’s second-largest oil consumer, could reopen from strict COVID-19 curbs. U.S. crude oil futures settled 2.1% higher at $88.37 a barrel.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.
The 10-year rose 1.7 basis points to 3.267%, after earlier touching its lowest level since Oct. 5 at 3.153%.