TORONTO _ The Canadian dollar was lower Wednesday while the American currency strengthened as traders look to the outcome of a meeting of eurozone finance ministers to discuss Greece's appeal for debt relief.
The loonie lost 0.26 of a cent to 79.27 cents US.
The meeting of eurozone finance ministers will be the group's first opportunity to hear directly from the new left-wing anti-austerity Greek government. Greece wants to renegotiate the terms of its international bailout ahead of the expiration of the current agreement in late February.
On the eve of the meeting, Prime Minister Alexis Tsipras said there is ``no way back'' for his government in its quest to rewrite the bailout terms.
It's an uphill battle, however, as the biggest and most influential creditor, Germany, has taken a hard line on the talks.
Oil prices were lower in the wake of a tumble of almost US$3 on Tuesday as traders speculate whether oil prices hit a recent bottom around $44 a barrel. Oil prices have hit six-year lows, down 50 per cent from the highs of last summer amid a huge supply/demand imbalance on global markets.
However, there is little evidence that global oil production levels have shown any decline. In fact, data from last week showed U.S. inventories at 80-year highs.
The latest data from the U.S. Department of Energy comes out later in the morning and analysts expect that supplies increased by another four million barrels last week.
The March crude contract in New York dropped 38 cents to US$49.64 a barrel.
Elsewhere on commodity markets, traders avoiding risk bought into gold and the April contract in New York gained $4 to US$1,236.20 an ounce.
March copper added one cent to US$2.56 a pound.
The decline in the loonie follows a drop of more than two-thirds of a U.S. cent on Tuesday. Part of the reason was a slide in commodity prices. But there has also been increasing speculation that the Bank of Canada will do another interest rate cut as early as next month to limit damage from the recent plunge in oil prices.
``The economic outlook from the perspective of the bank is one that likely justifies further interest rate cuts,'' said Camilla Sutton, Chief FX Strategist, Managing Director Scotiabank Global Banking and Markets.
``The market is pricing in a 50 per cent chance of a cut at the March 4th meeting. As oil comes under renewed pressure we would expect both the expectations for interest rate cuts in Canada to increase and Canadian dollar to weaken.''
The bank cut its key overnight rate by a quarter point to 0.75 per cent at its last interest rate meeting in January.