CANADA FX DEBT-C$ slides as investors recall central bank rate hike bets


(Adds analyst quotes and details throughout; updates prices)

* The Canadian dollar weakens 0.5% against the greenback

* Trading within the range of 1.2654 to 1.2749

* The Canadian economy grows 6.7% in the fourth quarter

* The Canadian 10-year rate hits its lowest level since Jan. 6

By Fergal Smith

TORONTO, March 1 (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Tuesday as the flight to quality sparked by Russia’s invasion of Ukraine offset national data showing the economy s developed at a steady pace in the fourth quarter.

Global stock markets crashed and the safe-haven US dollar soared as the sanctions invasion and disruption raised questions about the impact of the crisis on the global economy.

“The conflict between Ukraine and Russia is weighing on global growth expectations and risk appetite, which has lowered central bank rate hike expectations across the board,” Jay Zhao said. -Murray, Market Analyst at Monex Canada Inc.

Money markets see about an 80% chance that the Bank of Canada will raise interest rates on Wednesday and expect five hikes in total this year. [BOCWATCH]

That’s less aggressive than before the invasion, when markets were pricing in at least six rate hikes in 2022. Markets also downgraded estimates of rate hikes by the Federal Reserve and the European Central Bank.

The price of oil one of Canada’s top exports, rose 8% to $103.41 a barrel on the possibility of a severe supply disruption from Russia.

“While WTI (West Texas Intermediate) crossing the $100/barrel threshold did not cause the Canadian dollar to appreciate, it did manage to limit CAD losses against other G10 currencies,” said Zhao Murray.

the loon was down 0.5% at 1.2743 for the greenback, or 78.47 US cents, after trading in a range of 1.2654 to 1.2749.

The Canadian economy grew 6.7% in the fourth quarter, while a preliminary estimate indicated growth would continue in January.

Yields on Canadian government bonds fell across the curve, following the performance of US Treasuries. The 10 years
touched its lowest level since Jan. 6 at 1.679% before rebounding slightly to 1.725%, down 12.4 basis points on the day. (Reporting by Fergal Smith Editing by Mark Heinrich and Richard Chang) (([email protected]; +1 647 480 7446;)) Tags: CANADA FOREX/ (UPDATE 1)

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