By Ketki Saxena
Investing.com -- The Canadian dollar continued to weaken against its US counterpart today as risk aversion dominated markets, pressuring equities and the loonie, and buoying demand for the safe haven greenback.
The pair appeared little affected by the full docket of generally upbeat economic data from both the US and Canada this morning. US GDP contracted by 0.6% during the second quarter, in line with expectations. The Canadian economy meanwhile beat expectations for a contraction to eke out a 1% gain in July.
At 2:45 p.m ET, the USD/CAD pair was trading at C$1.3712 to a US dollar, up 0.79% in the day’s trading, and with the day’s range of 1.3605 - 1.3756.
The greenback was further boosted by hawkish rhetoric from Fed Policymakers, including Cleveland’s Fed President Loretta Mester who now expects rates to peak around 4.6%, and St. Louis Fed President James Bullard doubling down on the need to take rates higher and for longer.
FX Street notes “A combination of factors underpins the greenback and remains supportive of the bid tone surrounding the USD/CAD pair. Expectations that the Fed will stick to its aggressive policy tightening path triggers a fresh leg up in the US Treasury bond yields. This, along with the risk-off impulse, benefits the safe-haven buck.”
The Canadian dollar was further pressured by an intra-day reversal in crude prices, as an OPEC source told Reuters a cut was "likely", while two other OPEC+ sources said key members had spoken about the topic. Russia is also likely to propose that the bloc reduce oil output by about 1 million barrels per day. Plans for output will be announced at OPEC’s next meeting on Oct. 5. Crude markets also eased with the threat of Hurricane Ian receding. 158,000 bpd of U.S. oil production is expected to resume in coming days.