CANADA FX DEBT-Canadian dollar heads for third straight weekly decline on wider yield spreads
By Fergal Smith
TORONTO, Sept 25 (Reuters) - The Canadian dollar was on track for its third straight weekly decline against the US dollar on Friday and its steepest since March, as Canadian bond yields fell further below US rates.
The loonie was trading 0.1% lower at 1.4152 per US dollar, or 70.66 US cents, after touching its weakest intraday level since July 14 at 1.4154. For the week, the currency was down 1.2%.
The move tracked broad-based strength in the US dollar "and is in our view exclusively USD driven," said Amo Sahota, director at Klarity FX in San Francisco.
"Rising US yields and a 150 basis point 2-year yield spread between the US and Canada have made it easy to justify the advance," Sahota said.
Canada's 2-year yield fell 6.2 basis points further below the equivalent US rate to a gap of roughly 153 basis points, its widest since February 2025. A lower relative yield tends to reduce the attractiveness of a currency.
The US dollar fell against a basket of major currencies as oil prices eased, but was poised for a second straight weekly advance as investors raised bets on additional interest rate hikes from the Federal Reserve.
New orders for key US-manufactured capital goods increased more than expected in August and data for the prior month was revised sharply higher, pointing to another quarter of robust growth in business spending on equipment amid an artificial intelligence infrastructure buildout.
Canadian economic data was less upbeat, with a preliminary estimate showing that wholesale trade declined 1.5% in August from July.
The price of oil, one of Canada's major exports, fell as markets weighed the possibility of a truce between the US and Iran. US crude oil futures were trading 2.6% lower at $92.17 a barrel.
Canadian bond yields eased across a steeper curve, with the 10-year down 4.2 basis points at 3.956%.