* Canadian dollar weakens 1% against the greenback* Touches its weakest since Dec. 13* Price of U.S. oil rises 1.4%* 10-year yield touches a 2-1/2-mon
* Canadian dollar weakens 1% against the greenback
* Touches its weakest since Dec. 13
* Price of U.S. oil rises 1.4%
* 10-year yield touches a 2-1/2-month high
TORONTO, Feb 13 (Reuters) – The Canadian dollar on
Tuesday posted its biggest decline in nearly one year against
its U.S. counterpart, as hotter-than-expected U.S. inflation
data spooked investors who were hoping for an early start to
Federal Reserve interest rate cuts.
The loonie was trading 1% lower at 1.3585 to the U.S.
dollar, or 73.61 U.S. cents, its weakest intraday level since
Dec. 13 and its biggest decline since last March.
“USD-CAD moved sharply higher today as part of a broader
cross-asset response to stronger-than-expected U.S. inflation
data, which caused the market to push out expectations for the
first Fed rate cut,” said George Davis, chief technical
strategist at RBC Capital Markets.
Wall Street’s main indexes fell to one-week lows and the
U.S. dollar rallied against a basket of major currencies as U.S.
consumer prices rose 0.3% in January from December amid a surge
in the cost of shelter.
Canada’s economy could be particularly encumbered by a slow
move to rate cuts after consumers borrowed heavily during the
pandemic.
The Bank of Canada has said it’s premature to discuss easing
rates from a 22-year high of 5% and that underlying inflation is
still a concern. Canada’s inflation report for January is set
for release next Tuesday.
The Canadian government will prioritize creating the
economic conditions in its next budget to allow for interest
rates to come down, Finance Minister Chrystia Freeland said.
The loonie lost ground despite higher prices for oil, one of
Canada’s major exports. U.S. crude futures were up 1.4%
at $78.01 a barrel on Tuesday.
Canadian government bond yields rose across the curve,
tracking moves in U.S. Treasuries. The 10-year yield
was up 7.2 basis points to 3.653%, after earlier touching its
highest level since Nov. 27 at 3.695%.
(Reporting by Fergal Smith; editing by Jonathan Oatis)
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