C$ steadies after nine straight days of declines

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar was on track to end its longest losing streak in seven years against its U.S. counterpart on Tuesday, as investors awaited a policy decision this week by the Federal Reserve.

The loonie was trading nearly unchanged at 1.3847 to the U.S. dollar, or 72.22 U.S. cents, after nine straight days of declines. That's the longest streak of declines since May 2017.

Earlier, the currency touched 1.3864, matching Monday's eight-month low.

"My informal rule of thumb for major FX pairs is that one direction moves very rarely extend for more than ten sessions on the trot. The CAD sell-off is due a pause at least," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.

Investors expect the Fed to hold interest rates steady at a policy announcement on Wednesday but signal that rate cuts are imminent.

The Bank of Canada has already begun an easing cycle. Last week, the central bank cut its benchmark rate for a second time since June, lowering it to 4.50%.

"The CAD is fighting against a tidal wave of negative sentiment," Osborne said. "The latest CFTC data showed a huge accumulation of bearish CAD positioning."

Speculators have raised their bearish bets on the Canadian dollar to a record level, data from LSEG and the U.S. Commodity Futures Trading Commission (CFTC) showed on Friday. As of July 23, net short positions had increased to 161,603 contracts from 132,473 in the prior week.

The price of oil, one of Canada's major exports, fell on worries about weaker demand growth from China. U.S. crude oil futures were down 1.3% at 74.86 a barrel.

Canadian government bond yields moved lower across the curve. The 2-year was down 7.2 basis points at 3.505%, after earlier touching its lowest level since May 2023, at 3.500%.

(Reporting by Fergal Smith, Editing by Nick Zieminski)