This week the Canadian dollar has been recorded as the weakest against the US.
It hit its lowest on Tuesday, a day after a major energy sector takeover that could boost the loonie ahead of a fiscal update from Canadian Prime Minister Mark Carney’s government.
The loonie was trading 0.4% lower at 1.3680 per US dollar, or 73.10 US cents, after moving within a range of 1.3614 to 1.3691.
On Monday, the currency reached a nearly seven-week high of 1.3595.
“M&A news may have provided a headwind to the CAD yesterday, with losses today as the CAD slipped down in line with its major currency peers,” Scotiabank strategists Shaun Osborne and Eric Theoret said in a note.
British firm Shell said on Monday it has agreed to buy Canadian energy company ARC Resources in a deal worth $16.4 billion.
“This deal represents a significant endorsement of the Canadian energy sector as an investment destination amid the Carney government’s pro-growth pivot to the region,” Scotiabank strategists said.
Economists said Canada’s fiscal update, expected after 4 p.m. ET (2000 GMT), is likely to show the budget deficit improved and revenues rose over the last fiscal year, but the gains from higher oil prices were largely offset by weak consumer spending and new spending measures.
Canada’s housing market downturn, the longest in recent decades, is pressuring household spending, while the domestic stock market at record highs generates hundreds of billions of dollars of inflated wealth.
Conversely, the US dollar strengthened against a basket of major currencies as the market focused on central bank policy decisions.
While the Federal Reserve and the Bank of Canada are expected to keep interest rates unchanged on Wednesday.
The price of oil, one of Canada’s key exports, rose 3.4% to $99.61 a barrel as the Strait of Hormuz remained largely closed, blocking efforts to end the Iran war.
The United Arab Emirates said it would leave OPEC and OPEC+, easing some supply concerns.
Additionally, Canadian bond yields rose across the curve, tracking the move in U.S. Treasuries. The 10-year rose 2.7 basis points to 3.530% after hitting its highest since April 7 at 3.546%.
