Market News

By Fergal Smith

• Canadian dollar falls 0.4% against the greenback
• Touches its weakest since Aug. 19 at 1.3675
• Price of U.S. oil decreases 4>#/li###
• 10-year yield touches a 10-week high

TORONTO, Oct 8 (Reuters) - The Canadian dollar weakened to a seven-week low against its U.S. counterpart on Tuesday as the price of oil fell 4% and investors reassessed the outlook for Federal Reserve interest rate cuts.
The loonie was trading 0.4% lower at 1.3665 to the U.S. dollar, or 73.18 U.S. cents, after touching its weakest intraday level since Aug. 19 at 1.3675.

The U.S. dollar (.DXY) held steady near seven-week highs against a basket of major currencies as investors bet on a slower pace of interest rate cuts from the Fed after stronger-than-expected U.S. jobs data on Friday.

Concerns about the conflict in the Middle East and China's economy also lent support to the greenback.

"The real focus of the market over the last 48 hours has been the U.S. economy and the uncertainty from the Middle East," said Darren Richardson, chief operating officer at Richardson International Currency Exchange.
"When we see oil take that big of a tumble ... that's also contributing to that weakness in the Canadian dollar."

The price of oil fell to $74.02 a barrel, giving back some recent gains, as fears of supply interruptions from the conflict between Israel and Iran and a massive Gulf of Mexico hurricane eased.
Oil is one of Canada's major exports, which declined in August, contributing to a widening in the trade deficit to C$1.1 billion ($806 million). Analysts had forecast a C$500 million deficit.
Canadian government bond yields were mixed across a less-inverted curve.

The 2-year fell 1.9 basis points to 3.272%, while the 10-year was up 1.6 basis points at 3.258%, after earlier touching its highest level since July 30 at 3.273%.