* Canadian dollar weakens 0.2% against greenback
* Touches weakest level since Sept. 20 at 1.2886
* Canada’s annual inflation rate stays at 4.7% in November
* Price of U.S. oil falls 0.7%
By Fergal Smith
TORONTO, Dec 15 (Reuters) – The Canadian dollar weakened to
its lowest level in nearly three months against its U.S.
counterpart on Wednesday as the fast-spreading Omicron variant
weighed on oil prices and domestic data showed inflation
matching expectations.
Canada’s annual inflation rate remained https://www.reuters.com/markets/us/canadian-inflation-rate-stays-18-year-high-supply-chain-woes-2021-12-15
at 4.7% in November, the highest since March 2003, as supply
chain disruptions continued to exert upward pressure on prices,
Statistics Canada said.
To fight inflation, investors are betting that Canada’s
central bank will begin hiking interest rates in March or April.
“The market is already priced pretty aggressively for the
Bank of Canada next year,” said Bipan Rai, North America head of
FX strategy at CIBC Capital Markets. “So we haven’t seen much of
a reaction in USD-CAD because of that.”
Bank of Canada Governor Tiff Macklem is set to speak on the
central bank’s renewed monetary policy framework at 12 p.m. EST
(1700 GMT).
Inflation is also at multi-decade highs in the United
States. The Federal Reserve is expected to announce https://www.reuters.com/markets/us/fed-prepares-stiffen-inflation-response-post-transitory-world-2021-12-15
on Wednesday that it is speeding up the end of its pandemic-era
bond purchases and signal a turn to interest rate rises next
year. The U.S. central bank is due to release its latest policy
statement and updated economic projections at 2 p.m. EST.
The price of oil, one of Canada’s major exports, fell as the
World Health Organization said COVID-19 vaccines may be less
effective against the Omicron variant.
U.S. crude prices were down 0.7% at $70.26 a barrel,
while the Canadian dollar was trading 0.2% lower at
1.2881 to the greenback, or 77.63 U.S. cents. The Canadian
currency touched its weakest level since Sept. 20 at 1.2886.
On Tuesday, Canada cut its deficit forecast to C$144.5
billion for this fiscal year as tax revenues increased and less
emergency aid was used. Projected gross issuance of bonds and
T-bills was cut by C$59 billion to C$453 billion.
The Canadian 10-year yield eased 2 basis points
to 1.413%.
(Reporting by Fergal Smith
Editing by Paul Simao)
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Keywords: CANADA FOREX/ (PIX)
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