Canadian dollar recoups losses as investors assess BoC minutes

Loonie trades in a range of 1.4350 to 1.4433

Canada’s economy grows 0.3% in October

10-year yield increases 1.8 basis points

TORONTO, Dec 23 (Reuters) – The Canadian dollar steadied against the U.S. dollar on Monday, clawing back its earlier declines, as investors weighed domestic GDP data as well as minutes from the Bank of Canada’s latest meeting that showed some members favored a smaller rate cut.

The loonie was trading nearly unchanged at 1.4375 per U.S. dollar, or 69.57 U.S. cents, after trading in a range of 1.4350 to 1.4433.

The Bank of Canada’s decision to cut rates by 50 basis points on Dec. 11 was a close call, with some members of the governing council suggesting a 25-basis-point cut was more appropriate, the minutes showed.

“We continue to expect Canadian central bankers to cut rates by another 25 basis points in January and then pause in March to assess how the economy responds to lower interest rates,” Tiago Figueiredo, a macro strategist at Desjardins, said in a note.

Investors are pricing in roughly 13 basis points of easing at the central bank’s next policy decision on Jan. 29, equivalent to a 52% chance of a 25-basis-point cut.

Canada’s economy exceeded market expectations with 0.3% growth in October, led by increases in oil and gas extraction and manufacturing, but gross domestic product likely contracted in November.

On Thursday, the loonie touched its weakest intraday level since March 2020 at 1.4467. It has had to contend recently with the threat of U.S. trade tariffs as well as a hawkish shift by the Federal Reserve and domestic political uncertainty.

Canadian Prime Minister Justin Trudeau is under increasing pressure from his own legislators to step down and let someone else take over.

The U.S. dollar resumed its upward trajectory against a basket of major currencies as U.S. Treasury yields climbed.

The Canadian 10-year yield was up 1.8 basis points at 3.295%. (Reporting by Fergal Smith; Editing by Chris Reese)