Canadian dollar hits 3-week low as U.S. readies infrastructure plan

TORONTO: The Canadian dollar weakened on Tuesday to its lowest level in nearly three weeks against its U.S. counterpart, as oil fell and the prospect of a major spending package to tackle America's infrastructure needs broadly bolstered the greenback.

The Canadian dollar was trading 0.4pc lower at 1.2633 to the greenback, or 79.16 U.S. cents, having touched its weakest level since March 10 at 1.2646.

"Nothing can keep up with the U.S. dollar," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "The U.S. fiscal foot is on the accelerator, the monetary foot is on the accelerator."

U.S. President Joe Biden is set to outline on Wednesday how he intends to pay for a $3 trillion to $4 trillion infrastructure plan. Accelerating vaccinations have also boosted the U.S. economic outlook.

Canada sends about 75pc of its exports to the United States, while the loonie has gained 0.8pc against the greenback this year, the best performance among G10 currencies.

"I wouldn't be too pessimistic about Canada," Chandler said. "A lot of people think at next month's meeting the Bank of Canada may outline plans to taper their bond buying."

A hefty Canadian job gain in February has helped give the Bank of Canada confidence that the economic recovery will become less choppy, Deputy Governor Toni Gravelle told Reuters last week.

Canada's GDP data for January is due on Wednesday.

The price of oil, one of Canada's major exports, lost ground as the Suez Canal reopened to traffic. U.S. crude prices settled 1.6pc lower at $60.55 a barrel.

Pfizer Inc has agreed to accelerate the delivery of its COVID-19 vaccine to Canada, Prime Minister Justin Trudeau said.

Canada's 10-year yield rose 1.5 basis points to 1.550pc, but hel well below the 14-month high notched earlier this month at 1.677pc.