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The Canadian dollar weakened against its US counterpart on Tuesday, as it pulled back from a six-week high as investors await Thursday’s CPI data in the United States. The awaited reading could offer clues on the Fed’s policy intentions.
The price of oil, one of Canada’s major exports, settled 0.7% higher at $75.12 a barrel, its fourth consecutive day of gains, as the US government forecast record global petroleum consumption next year. Canadian government bond yields rose across the curve, tracking the move in US Treasuries.
Canada’s dollar was trading 0.2% lower at 1.3420 to the US counterpart, or 74.52 US cents, after moving in a range of 1.3377 to 1.3445. at the time of writing the pair is trading at 1.3424.
On Monday, the Canadian currency touched its strongest intraday level in more than six weeks at 1.3355; boosted by latest investor sentiment improvement and the data released last Friday showing the Canadian economy was adding many more jobs than expected in December.
After a very strong move on Monday, turnaround Tuesday’ was all but guaranteed to give back some of the gains. Wall Street stocks rallied as Fed Chair Jerome Powell steered clear of commenting on the monetary policy outlook in remarks to a forum on central bank independence.
There was no pushback by Powell against “the recent run-up of risk appetite, so, the market is really now in a consolidative tone as we wait for the next reading of US CPI.
US consumer price index data for December, due on Thursday, is expected to show the annual rate of inflation cooling to 6.5% from 7.1% in November.
