(New throughout, updates prices and market activity, adds
comment from strategist)
* Canadian dollar weakens 0.5% against the greenback
* Loonie touches a 6-day low at 1.2124
* Price of U.S. oil settles 0.2% higher
* Canadian 10-year yield hits its lowest level since April
15
By Fergal Smith
TORONTO, May 26 (Reuters) - The Canadian dollar fell on
Wednesday for a second day against its broadly stronger U.S.
counterpart, with some investors possibly unwinding bullish
positions in the Canadian currency when it failed to breach a
key level.
The loonie was trading 0.5% lower at 1.2117 to the
greenback, or 82.53 U.S. cents, having hit its weakest since
last Thursday at 1.2124.
"Broad-based USD strength and CAD weakness on the crosses"
helped push USD-CAD above the 1.2100 level, said George Davis,
chief technical strategist at RBC Capital Markets, referring to
the loonie's underperformance against some other G10 currencies
as well as the greenback.
It lost ground against the New Zealand dollar in
particular after the Reserve Bank of New Zealand surprised
markets by hinting at higher interest rates next year.
The Bank of Canada has already signaled more hawkish
guidance on the outlook for interest rates, which was one factor
helping the loonie notch a six-year high last week at 1.2013.
"Participants have been waiting to see how the pair
(USD-CAD) trades around the psychological 1.2000 level, but with
prices unable to push below here recently some short covering
flows may be starting to appear," Davis said.
The Bank of Canada is thinking in more concrete terms about
how its digital currency might look and work but it does not
currently see a strong case for issuing one, Deputy Governor
Timothy Lane said.
Oil , one of Canada's major exports, settled 0.2%
higher at $66.21 a barrel as a drop in U.S. crude stockpiles
reinforced expectations of improving demand ahead of the peak
summer driving season.
Canadian bond yields were mixed across the curve. The
10-year hit its lowest level since April 15 at
1.444% before rebounding to 1.453%, down less than one basis
point on the day.
(Reporting by Fergal Smith
Editing by Bernadette Baum and David Gregorio)
Read More
