Canadian dollar hits near four-week low as US CPI data boosts greenback
TLT•The Canadian dollar fell 0.5% to 1.4185 per US dollar, its weakest level since October 15, as stronger-than-expected US inflation lifted the greenback. Canadian two-year yields rose 9.4 basis points to 3.251%.
1. Loonie weakens
The Canadian dollar fell to a near four-week low as the US dollar strengthened broadly after hotter-than-expected US inflation data bolstered expectations of a Federal Reserve rate increase next month. The loonie was down 0.5% at 1.4185 per US dollar after touching 1.4210, its weakest intraday level since October 15.
2. Rate outlook diverges
Minutes from the Bank of Canada's October 28 rate decision showed governors agreed that uncertainty about the future path of rates did not mean the bank would do nothing. BMO Capital Markets senior economist Shelly Kaushik said recent data and energy-price developments suggested there was no hurry for another move in December. Markets had fully priced in a December Fed hike, while the chance of a Bank of Canada move was below 50%. Canadian two-year yields rose 9.4 basis points to 3.251%, and the gap below the equivalent US yield widened to about 149 basis points.
