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Canadian dollar weakens 0.1% against the greenback
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Touches a 12-day high intraday at 1.3275
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Price of U.S. oil settles 1.4% lower at $79.06 a barrel
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2-year yield touches a 3-month high at 4.206%
(Adds economist quote and details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 14 (Reuters) - The Canadian dollar edged
lower against its U.S. counterpart on Tuesday, pulling back from
its highest level in nearly two weeks, as oil prices fell and
U.S. inflation data pointed to additional tightening by the
Federal Reserve.
The loonie was trading 0.1% lower at 1.3350 to the
greenback, or 74.91 U.S. cents, after touching its strongest
since Feb. 2 at 1.3275.
U.S. consumer prices rose 0.5% in January from December,
with the annual rate easing to 6.4%, as Americans continued to
be burdened by higher costs for rental housing and food.
"U.S. inflation is grinding lower, but the still elevated pace of core price growth will keep the Fed on track to raise rates at least two more times this year," Sal Guatieri, a senior economist at BMO Capital Markets, said in a note. Hopes that the Fed might soon be able to pause its aggressive tightening campaign have contributed to some recovery in equity markets globally this year. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to swings in investor sentiment. U.S. crude oil futures prices settled 1.4% lower at $79.06 a barrel, pressured by supply concerns after the U.S. government said it would release more crude from its Strategic Petroleum Reserve.
The Bank of Canada has also been raising interest rates to fight inflation. Money markets have moved to fully price in a quarter-point hike by July after having expected the central bank's next move to be a cut before Friday's release of stronger-than-expected domestic employment data. Canadian government bond yields rose across the curve, tracking the move in U.S. Treasuries. The 2-year yield touched its highest since Nov. 9 at 4.206% before dipping slightly to 4.200%, up 11.3 basis points on the day. (Reporting by Fergal Smith; Editing by Alison Williams and Richard Chang)
