Canada's central bank held its benchmark interest rates steady at 1.75pc as expected but removed wording about the need for future rate hikes and lowered its growth forecast for 2019, to 1.2pc from 1.7pc.

"They brought more of the weakness on board than we expected them to." said Andrew Kelvin, senior rates strategist at TD Securities.

The Bank of Canada has raised rates by 125 basis points since July 2017. But the Canadian economy has taken a hit from the province of Alberta's mandatory production cut of oil - its biggest export - a slowdown in the housing market and wilting business sentiment over worries surrounding the US-China trade war.

Chances of an interest rate cut by December rose to nearly 70pc from 57pc before the policy announcement, data from the overnight index swaps market showed.

Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins are due to hold a press conference at 11:15 ET (1515 GMT).

Meanwhile, the US dollar rose to a 22-month high as souring confidence measures in the euro zone weighed on the euro.

At 10:36 a.m. (1436 GMT), the Canadian dollar was trading 0.6pc lower at 1.3499 to the greenback, or 74.08 US cents. The currency touched its weakest intraday level since Jan. 3 at 1.3522.

The price of oil, one of Canada's major exports, pulled back from a six-month high as data showing rising US stocks countered fears of tight supply resulting from OPEC output cuts and US sanctions on Venezuela and Iran. US crude prices were down 0.4pc at $66.06 a barrel .

Canadian government bond prices were higher across the yield curve, with the two-year up 12.5 Canadian cents to yield 1.506pc, its lowest since March 29, and the 10-year rising 78 Canadian cents to yield 1.668pc.

The 10-year yield fell 3.4 basis points further below the yield on the equivalent US bond to a spread of -85.4 basis points, its widest since March 25.