Canadian dollar steadies near 19-month low ahead of US inflation data
TLT•The Canadian dollar traded nearly unchanged at 1.4257 per US dollar after touching a 19-month low of 1.4331. Investors awaited US producer price data expected to show prices rose 6.6% year over year in October.
1. Dollar near 19-month low
The Canadian dollar steadied near a 19-month low against its US counterpart as investors awaited US producer price data that could support expectations for Federal Reserve rate hikes. The loonie traded nearly unchanged at 1.4257 per US dollar, or 70.14 US cents, after falling to 1.4331 intraday.
2. Rate and bond markets
Investors have fully priced in a 25-basis-point Fed rate hike in December and see some risk of a 50-basis-point move. Chances of a Bank of Canada rate increase next month were about 60%. Canadian bond yields rose across a flatter curve, with the 10-year yield up 7.1 basis points to 3.788%; its gap below the equivalent US rate widened to about 132 basis points.
3. Economic and oil context
Economists expected US producer prices to rise 6.6% year over year in October. Canadian data showed the economy shed jobs for a third straight month in October, while US crude futures settled 2.55% higher at $88.74 a barrel amid continued shipping disruptions through the Strait of Hormuz.
