C$ hits 2-month high on easing U.S. inflation pressures

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TORONTO — The Canadian dollar on Wednesday

notched its biggest gain in nearly three months against a

broadly weaker U.S. counterpart, as investors reacted to data

showing an easing of U.S. inflation pressures.

The loonie was trading 0.9% higher at 1.2775 to the

greenback, or 78.28 U.S. cents, its biggest advance since May

13. It touched its strongest intraday level since June 10 at

1.2752.

“Markets are all moving on the same theme today, and that’s

U.S. CPI coming in below expectations,” said Jay Zhao-Murray,

market analyst at Monex Canada Inc. “The (U.S.) dollar sold off

as traders piled back into riskier currencies.”

The U.S. dollar tumbled against a basket of major currencies

and Wall Street rallied as U.S. consumer prices rose at a slower

than expected annual pace in July, leading to reduced bets of a

super-sized interest rate hike by the Federal Reserve next

month.

Investors have worried that a rapid pace of central bank

tightening could derail global economic activity. Canada is a

major exporter of commodities, including oil, so the loonie

tends to be sensitive to the outlook for growth.

U.S. crude oil futures settled 1.6% higher at $91.93

a barrel, bolstered by the move into riskier assets and

encouraging figures on U.S. gasoline demand.

Canadian government bond yields eased across the curve,

tracking moves in U.S. Treasury yields.

The 2-year was down 7.5 basis points at 3.197%,

while the 10-year fell 2.3 basis points to 2.679%.

(Reporting by Fergal Smith; Editing by Elaine Hardcastle and

John Stonestreet)

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