(Adds economist quotes and details throughout, updates prices)
* Canadian dollar weakens 0.4% against greenback
* IMF raises Canada's 2021 growth forecast to 5%
* Price of U.S. oil settles 1.2% higher
* Canadian bond yields ease across flatter curve
By Fergal Smith
TORONTO, April 6 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as concern rose about
Canada's third wave of the COVID-19 pandemic and investors
awaited domestic economic data that could offer clues on the
Bank of Canada's policy outlook.
The loonie was trading 0.4% lower at 1.2573 to the
greenback, or 79.54 U.S. cents, having pulled back from its
strongest level since March 22 on Monday at 1.2497.
Canada's trade report for February is due on Wednesday,
while the March employment report is due on Friday.
"Our expectation is for a little bit stronger CAD on the
back of some positive data," said Kyle Dahms, economist at
National Bank of Canada.
He expects Canada's current account balance to turn positive
over the coming months, helped by higher commodity prices, and
that the Bank of Canada will cut its bond purchases when it
makes its next interest rate announcement on April 21.
Such a move would put the Canadian central bank at odds with
some peers, including the Federal Reserve and the European
Central Bank, which have said they will maintain or even
increase the pace of bond-buying.
The IMF raised its 2021 growth forecast for Canada by 1.4
percentage points to 5%, the biggest upgrade among G7 economies,
while strong economic data from China and the United States
helped to lift the price of oil, one of Canada's major exports.
U.S. crude prices settled 1.2% higher at $59.33 a
barrel.
Still, Canada's hospitalizations are surging as a third wave
of the pandemic sweeps across much of the country, Prime
Minister Justin Trudeau said.
Canadian government bond yields were lower across a flatter
curve in tandem with U.S. Treasuries. The 10-year
touched its lowest level since March 29 at 1.485% before edging
up to 1.490%, down 6.5 basis points on the day.
(Reporting by Fergal Smith
Editing by Paul Simao and Jonathan Oatis)
Read More
