TORONTO: The Canadian dollar weakened against its US counterpart on Tuesday as oil fell and investors braced for a speech by Bank of Canada Governor Stephen Poloz as well as pending Japanese and US central bank monetary policy decisions.
The price of US crude was down 1.55 percent to $42.63 a barrel ahead of an expected build in US crude oil stocks and on Venezuelan comments that the oil market remains oversupplied by 10 percent.
Investors will be looking to see whether Poloz emphasizes the downbeat tone of the Canadian central bank's most recent policy statement. The governor's prepared remarks on the topic of "Living With Lower for Longer" will be released at 12:35 p.m. EDT (1635 GMT), followed by a press conference at approximately 2:15 p.m. EDT.
The US Federal Reserve is due to announce its latest interest rate decision on Wednesday following a two-day policy meeting. Fed policymakers also are expected to again cut their forecasts for how high interest rates will need to go in an economy where output, productivity and inflation are growing at a slower pace than in past decades.
Meanwhile, the Bank of Japan will undertake a comprehensive review of its monetary policy at its meeting on Tuesday and Wednesday amid speculation it may lower short-term interest rates deeper into negative territory and change its bond purchasing program.
At 9:27 a.m. EDT (1327 GMT), the Canadian dollar was trading at C$1.3236 to the greenback, or 75.55 US cents, weaker than Monday's close of C$1.3207, or 75.72 US cents.
The currency's strongest level of the session was C$1.3190, while its weakest level was C$1.3241.
Canadian government bond prices were higher across a flatter yield curve in sympathy with US Treasuries as US housing starts tumbled in August.
The two-year bond rose 1.5 Canadian cents to yield 0.576 percent and the benchmark 10-year climbed 32 Canadian cents to yield 1.159 percent.
Canadian inflation and retail sales data are due on Friday. The annual inflation rate is forecast to have edged up to 1.4 percent in August, while investors will be looking for signs that the federal government's new child benefit checks gave a boost to retail sales.
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