June 21, 2024

Canadian FX debt-C$ recovers from 6-day low as US inflation slows

US Inflation Cooled on Thursday The Canadian dollar rebounded from a one-week low against its US counterpart as cooling US inflation opened the door for Federal Reserve interest rate cuts this year.

The loonie rose 0.3% to trade at 1.3675, or 73.13 cents, to the dollar, after earlier hitting 1.3734, its weakest level since Friday.

“The Canadian dollar basically recouped its losses from Wednesday today,” said Simon Harvey, head of FX analysis at Monex Europe and Monex Canada.

Domestic jobs data helped the currency, but the biggest driver was U.S. data that eased ongoing inflation concerns, Harvey said.

The number of people working in Canada rose to 51,400 in March following a rise of 14,600 in February, Statistics Canada said.

The U.S. economy grew more slowly than estimated in the first quarter after consumer spending was revised downward and a key measure of inflation fell, leaving the Federal Reserve on track to cut interest rates at least once before the end of the year.

Investors looked ahead to Canadian gross domestic product data on Friday, which was expected to show the economy grew at an annualized rate of 2.2% in the first quarter. However, that would be slower than the Bank of Canada’s latest forecast of 2.8%.

Canada’s central bank said Thursday it will increase oversight of payment service providers and introduce a real-time payment system over the next two to three years to modernize the country’s financial infrastructure.

Oil, one of Canada’s main exports, fell 1.8% to $77.77 a barrel ahead of the OPEC+ meeting at the weekend.

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Canadian bond yields edged lower, tracking U.S. government bonds. The 10-year benchmark fell 6.3 basis points to 3.697%, from a four-week high of 3.783% earlier. (Reporting by Fergal Smith; Editing by Nick Zieminski)