Canadian dollar losing streak hits 8 days on jumbo-rate-cut noise

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar fell to a two-month low against its U.S. counterpart on Friday as investors continued to weigh chances of the Bank of Canada supersizing its rate cuts after a downbeat business survey offset stronger-than-expected jobs data.

The loonie was trading 0.2% lower at 1.3760 per U.S. dollar, or 72.67 U.S. cents, after touching its weakest level since Aug. 7 at 1.3783.

It was the eighth straight daily decline for the currency, the longest losing streak since July. For the week, the currency was down 1.4%, its largest weekly decline since March 2023.

"There is something of a developing clamour for the BoC to up the pace of easing which has driven swap and bond spreads wider in the USD's favour over the past couple of weeks and it will be difficult for the CAD to improve under its own steam while markets are mulling the risk of a 50 bps (basis-point) ease at the end of the month," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.

Canada added 47,000 jobs in September, eclipsing expectations for a 27,000 increase, but the BoC's Business Outlook Survey indicated firms still see weak demand.

That left the market's implied chances of an unusually large half-percentage-point rate cut by the central bank at its next policy decision on Oct. 23 largely unchanged at about 50%.

The BoC is likely to lower interest rates to a neutral setting that neither restricts nor stimulates its economy more quickly than the U.S. Federal Reserve, said analysts, who see weak Canadian growth raising the risk of a sustained drop in inflation below the central bank's 2% target.

Canadian bond yields eased across the curve ahead of a market holiday on Monday for Thanksgiving Day. The 2-year was down 2.7 basis points at 3.077%.

(Reporting by Fergal Smith; Editing by Richard Chang)