The Canadian dollar CADUSD weakened against its U.S. counterpart on Wednesday, pulling back from an earlier one-week high, as the greenback notched broad-based gains and escalating Russia-Ukraine tensions led to investors turning more risk averse.
The loonie was trading 0.3 per cent lower at 1.3990 to the U.S. dollar, or 71.48 U.S. cents, after two consecutive days of gains. The currency touched its strongest intraday level since Nov. 13 at 1.3948.
“USD-CAD resumed its uptrend after a 2-day pause,” said Michael Goshko, senior market analyst at Convera Canada ULC. “The news Ukraine fired Storm Shadow missiles into Russia saw the market switch from risk-on to risk-off.”
Wall Street stocks fell after a report Ukraine fired long-range British Storm Shadow missiles into Russian territory and the safe-haven U.S. dollar climbed against a basket of major currencies, restarting its post-election rally.
The price of oil, one of Canada’s major exports, gave back its earlier gains to trade 0.5 per cent lower at $69.06 a barrel.
Investors have reduced bets on another outsized interest rate cut by the Bank of Canada after domestic data on Tuesday showed inflation climbing more than expected to 2 per cent.
Canadian retail sales data for September, due on Friday, could offer additional clues on the BoC policy outlook. Economists expect an increase of 0.4 per cent from August.
Canadian bond yields rose across the curve, tracking moves in U.S. Treasuries. The 10-year was up 1.5 basis points at 3.350 per cent, after earlier touching its highest level since July 24 at 3.390 per cent.
C$5-billion of the 3.25 per cent December 2034 bond was sold at auction at an average yield of 3.368 per cent.