* Canadian dollar falls 0.5% against the greenback
* Loonie touches its weakest since Jan. 3 at 1.3522
* Price of U.S. oil decreases 0.6%
* Canada-U.S. 10-year spread posts widest in nearly one month
By Fergal Smith
TORONTO, April 24 (Reuters) - The Canadian dollar fell to a nearly four-month low against its broadly stronger U.S. counterpart on Wednesday, as investors raised bets on a Bank of Canada interest rate cut this year after the central bank slashed its economic growth outlook.
Canada's central bank held its benchmark interest rate steady at 1.75% as expected but removed wording about the need for future rate hikes and lowered its growth forecast for 2019 to 1.2% from 1.7%. is pretty clear that the Bank of Canada softened its stance again," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.
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 - the country's biggest export - a slowdown in the housing market and wilting business sentiment over worries surrounding the U.S.-China trade war.
Chances of an interest rate cut by December rose to 65% from 57% before the policy announcement, data from the overnight index swaps market showed. BOCWATCH
At 4:03 p.m. (2003 GMT), the Canadian dollar CAD=D4 was trading 0.5% lower at 1.3484 to the greenback, or 74.16 U.S. cents. The currency touched its weakest intraday level since Jan. 3 at 1.3522.
The decline for the loonie came as disappointing German data helped push the U.S. dollar .DXY to a nearly two-year high against a basket of major currencies. (the Canadian dollar) was already pushing an open door today. The market was clearly leaning toward the sell side and I think that it took this as simply an excuse to press," Chandler said.
The price of oil pulled back from a six-month high as data showing rising U.S. stocks countered fears of tight supply resulting from OPEC output cuts and U.S. sanctions on Venezuela and Iran. crude oil futures CLc1 settled 0.6% lower at $65.89 a barrel.
Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 11.5 Canadian cents to yield 1.511% and the 10-year CA10YT=RR rising 72 Canadian cents to yield 1.674%.
The 10-year yield fell 2.8 basis points further below the yield on the equivalent U.S. bond to a spread of -84.8 basis points, its widest since March 25.