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Loonie Weakens as Poloz Pledge of Caution Leaves Bulls Reeling

  • Short-term yields drop as confidence in rate-hike bets fades
  • Currency is still among world’s strongest this quarter
Canadian one dollar coins are packaged at the Royal Canadian Mint in Winnipeg on Friday July 5 2013.
Photographer: Brent Lewin/Bloomberg

The loonie fell and short-term government debt gained as Bank of Canada Governor Stephen Poloz’s comment that the bank will proceed “cautiously” after raising rates twice this year surprised investors who saw another hike as imminent.

The currency weakened to an almost four-week low, paring its advance this quarter to 4.1 percent against the greenback, which still leaves it among the strongest of the major currencies tracked by Bloomberg. Yields on Canada’s two-year sovereign debt fell from a six-year high as confidence in an October rate boost sank.