November 29, 2017 / 2:35 PM / in 19 days

Canadian dollar hits near four-week low as oil prices drop

TORONTO (Reuters) - The Canadian dollar weakened to a nearly four-week low against its U.S. counterpart on Wednesday as oil prices fell, while data showing strong American economic growth helped the greenback hold onto this week’s gains.

Prices of oil, one of Canada’s major exports, were pressured by conflicting statements from oil ministers a day ahead of OPEC’s meeting in Vienna, as members debate the path for an extension of the group’s supply-cut agreement.

U.S. crude oil futures CLc1 settled 1.2 percent lower at $57.30 a barrel.

The U.S. economy expanded in the third quarter at its quickest pace in three years. Signs of progress in U.S. Republicans’ efforts to get a tax bill passed added to support for the U.S. dollar.

At 4 p.m. EDT (2100 GMT), the Canadian dollar CAD=D4 was trading at C$1.2860 to the greenback, or 77.76 U.S. cents, down 0.3 percent.

The currency’s strongest level of the session was C$1.2805, while it touched its weakest since Nov. 2 at C$1.2875.

Data will be released Friday on Canada’s jobs for November and gross domestic product for the quarter.

“I think there is some downside risk to Canadian GDP, and that might give you your final little flurry in USD-CAD,” said Amo Sahota, director at Klarity FX in San Francisco.

Sahota expects investors to become interested in buying the Canadian dollar if the currency weakens to its 200-day moving average around C$1.2970.

Investors are also turning attention to an interest rate decision by the Bank of Canada next week.

The central bank is breathing a sigh of relief that Canada’s housing boom and the hints of a bust in Toronto are stabilizing, but the optimism is premature, analysts said.

Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 2.5 Canadian cents to yield 1.433 percent and the 10-year CA10YT=RR falling 32 Canadian cents to yield 1.880 percent.

The gap between the 10-year yield and its U.S. counterpart widened by 0.7 of a basis point to a spread of -50.3 basis points, its widest since July 11.

Reporting by Fergal Smith; Editing by Susan Thomas and Jonathan Oatis

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