• Canadian dollar gains 0.1% against the greenback
• Bank of Canada cuts benchmark rate by 50 basis points
• Price of US oil settles 2.5% higher
• 10-year yield climbs 7.9 basis points

TORONTO, Dec 11 (Reuters) - The Canadian dollar rose against its U.S. counterpart and all other G10 currencies on Wednesday as the Bank of Canada cut interest rates by half a percentage point but shifted to more hawkish guidance on prospects for additional easing.

The loonie was trading 0.1% higher at 1.4160 to the U.S. dollar, or 70.62 U.S. cents, after trading in a range of 1.4121 to 1.4193. On Tuesday, it touched a 4-1/2-year low at 1.4194.

"The decision to cut by 50 bps (basis points) has largely been overshadowed by a hawkish shift in guidance from the BoC," said Nick Rees, senior FX market analyst at Monex Europe Ltd.

The Canadian central bank slashed its key policy rate by 50 bps, as expected, to 3.25% and indicated further cuts would be more gradual, in a shift from previous messaging that continuous easing was needed to support growth.

BoC Governor Tiff Macklem said for the first time that the possibility of new tariffs under U.S. President-elect Donald Trump on imports from Canada represented "a major new uncertainty."

"We are inclined to think that tariffs will warrant substantial further policy easing in 2025, regardless of the bank's latest statements, which should ensure that this current bout of CAD strength is short-lived," Rees said.

Money markets see a roughly 60% chance the BoC will cut its policy rate by 25 bps in January, with the market pricing in a 40% chance of a pause in cuts.

The loonie was the only G10 currency to gain ground against the U.S. dollar (.DXY) , opens new tab as investors assessed U.S. inflation data. The price of oil , one of Canada's major exports, settled 2.5% higher at $70.29 a barrel.

The Canadian 10-year yield was up 7.9 basis points at 3.098%, extending its rebound from a two-month low on Friday at 2.970%.

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https://www.reuters.com/markets/currencies/canadian-dollar-rallies-central-banks-more-hawkish-guidance-2024-12-11/