Canadian dollar weakens ahead of BoC rate decision, 10-year yield hits a two-year high

Canadian dollar weakens ahead of BoC rate decision, 10-year yield hits a two-year high REUTERS PUBLISHED YESTERDAY COMMENTS SHARE SAVE FOR LATER Listen to this article Learn more about audio Log in or create a free account to listen to this article. The Canadian dollar weakened against its U.S. ​counterpart on Tuesday as investors ‌bet on a Federal Reserve interest rate hike next month, while a sell-off in global bond markets helped underpin domestic borrowing costs ahead of a ⁠Bank ​of Canada interest rate decision. The loonie was trading 0.4% lower at 1.3905 per U.S. dollar, or 71.92 U.S. cents, putting it among the biggest decliners in the Group of 10 ​currencies. “The loonie is clearly a laggard ‌in G10 FX today as traders continue to increase bets that the Fed will have to raise interest rates in September to meet its 2% target,” said Amo Sahota, director at Klarity FX in San ‌Francisco. “Meanwhile the ​BoC is expected ‌to remain on hold tomorrow at 2.25%, but may introduce ​a slightly more dovish tone given the escalation ⁠in the trade war with the U.S.,” Sahota ⁠said. The U.S. needs to start being serious and stop trying ​to be tough before talks on a possible trade deal with Canada can restart, Prime Minister Mark Carney told reporters. Investors expect the Bank of Canada to leave its benchmark interest rate on hold at 2.25% on Wednesday ⁠despite recent GDP data that showed the economy growing at a faster pace than the central bank had forecast. Canada’s manufacturing sector expanded for a fifth straight month in August as output and employment rose but increased trade tensions cast doubt ⁠on the pace of growth being sustained, ​data on Tuesday showed. The price of oil, one of Canada’s ⁠major exports, rose to a near six-week high as a resumption in fighting between ‌the United States and Iran in the Middle East renewed fears of supply ​disruptions from the oil-producing region. U.S. crude oil futures were trading 4.4% higher at $89.53 a barrel. The Canadian 10-year yield was up 1.5 basis points at 3.754%, after ​earlier touching its highest level since May 2024 at 3.790%. Sign up for our new Business Brief newsletter. A daily look at the most important business stories that are making news and moving markets, written by Chris Wilson-Smith SIGN UP EXPLORE NEWSLETTERS Report an editorial error Report a technical issue Comments Read or post comments Related stories Canadian dollar rebounds from two-week low, helped by month-end…