(Adds strategist comments, market details, updates prices)
* The Canadian dollar weakens 0.4% against the greenback
* Reached its lowest level since Dec. 22 at 1.2913
* The price of US oil increases by 0.5%
* 10-year Canadian reach peaks in 11 years
By Fergal Smith
TORONTO, May 2 (Reuters) – The Canadian dollar weakened to its lowest level in more than four months against its U.S. counterpart on Monday, as the safe-haven greenback rose sharply and Wall Street lost ground. ground ahead of a policy decision this week by the Federal Reserve.
“The Canadian dollar is currently weakening amid broad-based US dollar strength,” said Eric Theoret, global macro strategist at Manulife Investment Management.
The relationship between the loonie and its fundamental drivers, such as oil, “is still quite weak at the moment,” with the currency influenced by general market sentiment, including the performance of the S&P 500.
The benchmark U.S. stock index, the S&P 500, fell and the U.S. dollar rose against a basket of major currencies, with traders positioning themselves for an expected half-point interest rate hike and the launch quantitative tightening by the Fed. The central bank is due to meet on Tuesday and Wednesday.
“The broader price action today in asset markets is the result of higher real yields globally,” Theoret said.
Real yields, or the spread between nominal yields and inflation expectations, rose as the yield on 10-year US Treasuries hit 3% for the first time in more than three years.
Meanwhile, national data showed manufacturing activity grew at a slower pace in April as the war in Ukraine contributed to capacity and cost pressures.
The price of oil
The Canadian 10-year rate
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