Canadian dollar weakens as U.S. data boosts greenback
Canadian dollar falls 0.3% against the greenback
Two-thirds of analysts expect BoC to cut 50 bps
Price of U.S. oil steadies
Bond yields rise across the curve
By Fergal Smith
TORONTO, Oct 17 (Reuters) -The Canadian dollar weakened against its U.S. counterpart on Thursday as stronger-than-expected U.S. retail sales data contrasted with recent signs of continued slack in the domestic economy.
The loonie CAD= was trading 0.3% lower at 1.3790 to the U.S. dollar, or 72.52 U.S. cents, moving closer to the 10-week low it touched on Tuesday at 1.3838.
"The big story has been the U.S. dollar and U.S. yields," said Aaron Hurd, senior portfolio manager in the currency group at State Street Global Advisors. "We went from clear signs of softer U.S. activity, a softer labor market, to really a string of no landing, very strong U.S. data."
In a no landing scenario, strong growth that stalls improvement in inflation reduces prospects of Federal Reserve interest rate cuts.
The U.S. dollar .DXY jumped to an 11-week high against a basket of major currencies after the retail sales data supported the view that the economy maintained a strong growth pace in the third quarter.
"You have USD-CAD that's followed the broad dollar closely," Hurd said. "There's still a lot of slack in the Canadian economy. The Bank of Canada is still looking to cut rates."
The BoC will reduce its overnight rate by 50 basis points on Oct. 23 as price pressures ease, according to two-thirds of economists polled by Reuters. It would be the first move greater than 25 basis points since the central bank's easing campaign began in June.
Data on Tuesday showed Canadian inflation slowing more than expected to a rate of 1.6% in September.
The price of oil CLc1, one of Canada's major exports, steadied at about $70.40 a barrel as investors waited on developments in the Middle East.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 6.3 basis points at 3.162%.
Reporting by Fergal Smith
Editing by Alistair Bell
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