CANADA FX DEBT-Canadian dollar pulls back from six-week high ahead of key jobs data
By Fergal Smith
TORONTO, Nov 3 (Reuters) - The Canadian dollar extended its pullback from a six-week high against the US dollar on Tuesday, as oil prices fell and ahead of domestic jobs data later in the week that could guide expectations for additional Bank of Canada interest rate hikes.
The loonie was trading 0.1% lower at 1.40 per US dollar, or 74.21 US cents, after trading in a range of 1.3951 to 1.4005.
On Friday, the currency touched its strongest intraday level since September 16 at 1.3940.
The BoC last week raised its benchmark interest rate for the first time in three years and said further increases might be needed to prevent soaring energy costs from driving broader inflation.
Governor Tiff Macklem reiterated on Tuesday that more interest rate hikes might be needed.
"The surprising hawkishness from the Bank might not hold the test of time," said Sébastien Mc Mahon, chief economist at iA Financial Group.
Data since the policy decision has shown that Canada's economy likely grew at an annualized rate of 1.3% in the third quarter, which would fall short of the BoC's 2% projection, and that the manufacturing sector contracted in October for the first time this year.
"We might have seen peak hawkishness already and markets are likely to remove a few 2027 BoC hikes from its pricing if, for example, Friday's October jobs report comes in weak," Mc Mahon said.
Analysts expect October employment data, due on Friday, to show the economy adding 13,600 jobs.
The swap market is pricing in roughly 70 basis points of additional tightening from the BoC by the end of 2027.
The price of oil, one of Canada's major exports, touched a nearly three-week low amid talks to end the wars in Ukraine and Iran. US crude futures settled down 0.4% at $96.09 a barrel.
The Canadian 10-year yield rose 1.8 basis points to 3.771% after earlier touching its lowest level since September 2 at 3.727%.