Market News

By Fergal Smith

TORONTO, Sept 16 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Monday but lost ground against most other Group of 10 currencies as investors awaited domestic inflation data and an interest rate decision by the Federal Reserve.
The loonie was trading nearly unchanged at 1.3590 to the U.S. dollar, or 73.58 U.S. cents, after moving in a range of 1.3567 to 1.3607.
It was the only G10 currency other than the yen not to gain ground against the U.S. dollar (.DXY) as expectations increased that the Fed could cut by 50 basis points, rather than 25, at a policy decision on Wednesday. Last Wednesday, the loonie touched its weakest level since Aug. 21 at 1.3622.

The larger move could give the Bank of Canada "a green light to be able to consider something like a jumbo rate cut themselves," said Michael Goshko, senior market analyst at Convera Canada ULC. "I don't know of any other central bank that has worried about the risk of inflation undershooting the target."
The Bank of Canada has said it could increase the size of rate cuts if the economy needs a boost. Since June, the central bank has lowered its benchmark rate three times by a quarter-percentage-point to leave it at 4.25%.

Canadian home sales rose 1.3% in August from July but were down 2.1% on an annual basis.
Canada's consumer price index report, due on Tuesday is expected to show inflation slowing to an annual rate of 2.1% in August from 2.5% in July.
The price of oil, one of Canada's major exports, settled 2.1% higher at $70.09 a barrel, extending its rebound from a recent 16-month low.
Canadian bond yields eased across the curve. The 2-year was down 4.9 basis points at 2.898%, after earlier hitting its lowest level since June 2022 at 2.862%.