Market News

CANADA FX DEBT-C$ weakens as investors eye additional Fed rate hikes - REUTERS

AUGUST 18, 2022

 (Adds analyst quotes and details throughout; updates prices)
    * Canadian dollar weakens 0.4% against the greenback
    * Trades in a range of 1.2828 to 1.2936
    * Price of U.S. oil settles 1.8% higher
    * Canadian bond yields rise across curve

    By Fergal Smith
    TORONTO, Aug 17 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday as investors digested
minutes from the latest Federal Reserve policy meeting and
awaited domestic retail sales data due at the end of the week.
    U.S. stocks pared losses but remained lower on the day as
Fed officials saw "little evidence" late last month that U.S.
inflation pressures were easing, and steeled themselves to force
the economy to slow down as much as needed to control the surge
in prices.             
    Canada sends about 75% of its exports to the United States. 
    "The loonie weakened in anticipation of the FOMC minutes,"
said Amo Sahota, director at Klarity FX in San Francisco. "It's
clear that the Fed will continue to tighten."
    The Canadian dollar        was trading 0.4% lower at 1.29 to
the greenback, or 77.52 U.S. cents, giving back nearly all of
the previous day's gain. It traded in a range of 1.2828 to
    The loonie had rallied on Tuesday after domestic data showed
rising underlying inflation pressures.             
    Canadian retail sales data, due on Friday, could offer
further clues on the strength of the domestic economy. Data
earlier in August showed that Canada shed jobs for a second
straight month in July.
    "The softer Canadian labor report will be weighing on the
mind of traders ahead of Friday's retail sales report to see if
consumers are paring back spending," Sahota said.
    The price of oil, one of Canada's major exports, recovered
from a six-month low after a steeper-than-expected drawdown in
U.S. crude stocks. U.S. crude oil futures        settled 1.8%
higher at $88.11 a barrel.                 
    Canadian government bond yields were higher across the
curve, tracking the move in U.S. Treasuries. The 10-year
            touched its highest since July 25 at 2.890% before
dipping to 2.848%, up 9.5 basis points on the day.

 (Reporting by Fergal Smith; Editing by David Holmes and
Alistair Bell)


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