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Canadian dollar weakens 0.1% against the greenback
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Touches its weakest level since Jan. 6 at 1.3537
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Canadian producer prices rise 0.4% in January
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10-year yield touches a seven-week high
(Adds dealer quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 17 (Reuters) - The Canadian dollar edged
lower against its U.S. counterpart on Friday, adding to this
week's losses, as investors favored the U.S. currency in
anticipation of additional interest rate hikes by the Federal
Reserve.
The loonie was trading 0.1% lower at 1.3470 to the
greenback, or 74.24 U.S. cents, after touching its weakest since
Jan. 6 at 1.3537. For the week, it was down 0.9%.
"The move higher in the USD is reflecting a repricing of
interest rate hikes in the market," said Tony Valente, senior FX
dealer at AscendantFX.
"The CAD is going to have to adjust to this new thinking, so the path of least resistance will be for the CAD to weaken off some more over the next couple of weeks." Money markets are betting that the Fed's benchmark rate will peak at about 5.25% over the coming months, up from the 4.90% level that was expected at the start of February, after U.S. economic data pointed to inflation pressures remaining sticky.
The decline for the loonie came as Wall Street dropped and the price of oil, one of Canada's major exports, settled 2.7% lower at $76.34 a barrel. Domestic data showed that producer prices rose by 0.4% in January from December, compared with forecasts for a decline of 0.1%, and that foreign investors bought a net C$21.2 billion ($15.7 billion) in Canadian securities in December. The Canadian 10-year yield touched its highest level since Dec. 30 at 3.328% before dipping to 3.294%, up 1.2 basis points on the day. (Reporting by Fergal Smith; editing by Jonathan Oatis)
