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C$ hits 2-month high on easing U.S. inflation pressures

08/10/2022 | 03:20pm EST
FILE PHOTO: A Canadian dollar coin, commonly known as the

TORONTO (Reuters) - The Canadian dollar on Wednesday notched its biggest gain in nearly three months against a broadly weaker U.S. counterpart, as investors reacted to data showing an easing of U.S. inflation pressures.

The loonie was trading 0.9% higher at 1.2775 to the greenback, or 78.28 U.S. cents, its biggest advance since May 13. It touched its strongest intraday level since June 10 at 1.2752.

"Markets are all moving on the same theme today, and that's U.S. CPI coming in below expectations," said Jay Zhao-Murray, market analyst at Monex Canada Inc. "The (U.S.) dollar sold off as traders piled back into riskier currencies."

The U.S. dollar tumbled against a basket of major currencies and Wall Street rallied as U.S. consumer prices rose at a slower than expected annual pace in July, leading to reduced bets of a super-sized interest rate hike by the Federal Reserve next month.

Investors have worried that a rapid pace of central bank tightening could derail global economic activity. Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the outlook for growth.

U.S. crude oil futures settled 1.6% higher at $91.93 a barrel, bolstered by the move into riskier assets and encouraging figures on U.S. gasoline demand.

Canadian government bond yields eased across the curve, tracking moves in U.S. Treasury yields.

The 2-year was down 7.5 basis points at 3.197%, while the 10-year fell 2.3 basis points to 2.679%.

(Reporting by Fergal Smith; Editing by Elaine Hardcastle and John Stonestreet)

By Fergal Smith


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) -0.09% 0.91415 Delayed Quote.-0.17%
BRENT OIL -1.49% 85.9 Delayed Quote.11.13%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) 0.49% 1.65502 Delayed Quote.-3.67%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) -0.90% 99.684 Delayed Quote.10.45%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) -0.28% 0.69496 Delayed Quote.-3.42%
EURO / CANADIAN DOLLAR (EUR/CAD) 0.29% 1.41855 Delayed Quote.-1.51%
NEW ZEALAND DOLLAR / CANADIAN DOLLAR (NZD/CAD) 0.93% 0.86357 Delayed Quote.-0.98%
S&P GSCI CRUDE OIL INDEX -1.54% 438.3425 Real-time Quote.7.99%
US DOLLAR / CANADIAN DOLLAR (USD/CAD) 0.00% 1.3468 Delayed Quote.6.34%
WTI -1.34% 80.208 Delayed Quote.6.89%
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