C$ hits 2-week low as Fed officials lean hawkish
TORONTO — The Canadian dollar weakened to
its lowest level in nearly two weeks against its U.S.
counterpart on Thursday as comments by Federal Reserve officials
on the outlook for interest rates bolstered the greenback
against a basket of major currencies.
The loonie was trading 0.2% lower at 1.2940 to the
greenback, or 77.28 U.S. cents, after touching its weakest since
Aug. 5 at 1.2966.
Fed policymakers are “pushing the market’s perception” of a
more aggressive rate hike at the September policy announcement
than had been expected after softer-than-expected inflation data
last week, said Michael Goshko, senior market analyst at Convera
St. Louis Fed President James Bullard was reported to have
said he is leaning towards a 75 basis points hike next month,
while San Francisco Federal Reserve President Mary Daly said
that raising rates by either 50 or 75 basis points would be
The U.S. dollar currency index notched a three-week
The loonie lost ground even as the price of oil, one of
Canada’s major exports, was supported by robust U.S. fuel
consumption data. U.S. crude prices settled 2.7% higher
at $90.50 a barrel.
Domestic data showed that producer prices fell by 2.1% in
July from June. Still, they were up 11.9% on an annual basis.
Canadian inflation is not likely to return to the central
bank’s 2% target until 2024 after possibly peaking in June, as
less volatile items like wages and rent displace energy as key
sources of price pressure, analysts say.
Canadian retail sales data for June, due on Friday, could
offer more clues on the domestic economy’s outlook.
Canadian government bond yields were mixed across the curve.
The 10-year eased nearly one basis point to 2.852%,
after touching on Wednesday its highest intraday level in more
than three weeks at 2.890%.
(Reporting by Fergal Smith;
Editing by Alison Williams and Grant McCool)