Canadian dollar weakens 0.2 against the greenback
Touches its weakest since May 23 at 1.3741
BoC cuts its policy rate by 25 basis points
10year yield falls to near 3month low

TORONTO, June 5 Reuters The Canadian dollar weakened to a near twoweek low against its U.S. counterpart on Wednesday as investors bet the Bank of Canada would cut interest rates further after it eased for the first time in more than four years.

The loonie was trading 0.2 lower at 1.3710 to the U.S. dollar, or 72.94 U.S. cents, after touching its weakest intraday level since May 23 at 1.3741.

The Bank of Canada trimmed its key policy rate by 25 basis points to 4.75, in a widely expected move, and said more easing was likely if inflation continued to fall.

Based on the current economic momentum and the likelihood that population growth now likely supports aggregate supply more than demand, we think the BoC will cut rates at least once more before the Fed Federal Reserve meets on Sept. 18, leaving CAD vulnerable to a further widening in rate differentials, said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.

Investors see a roughly 40 chance the central bank would cut another 25 basis points at its next meeting on July 24 while a cut by September is fully priced in, swap market data showed.

The move to lower rates came despite data showing that the Canadian services economy grew in May for the first time in a year as firms saw an increase in new business and hired…