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Loonie hits its weakest since Jan. 6 at 1.3468
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New home prices fall 0.2% in January
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Price of U.S. oil settles 3.2% lower
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10-year yield eases 6.4 basis points
(Adds strategist quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 22 (Reuters) - The Canadian dollar on
Wednesday weakened to a near seven-week low against its U.S.
counterpart as the recent rise in global borrowing costs made
the currency less attractive to investors.
The loonie was trading nearly 0.2% lower at 1.3561 to
the greenback, or 73.74 U.S. cents, after touching its weakest
level since Jan. 6 at 1.3568.
"The primary force is the rise in U.S. rates that is
effectively tightening global financial conditions," said Karl
Schamotta, chief market strategist at Corpay.
"That is making it hesitant for investors to buy the
Canadian dollar on the basis that it (Canada) is an interest
rate sensitive economy and could suffer further weakness if
rates remains as high as they are today."
Bond yields have moved sharply higher in recent weeks as
investors bet that the Federal Reserve would raise interest
rates to a higher endpoint than previously thought.
The U.S. dollar rose against a basket of major
currencies after the publication of minutes from the Fed's
latest policy meeting which showed solid backing for further
tightening.
Canadian new home prices fell 0.2% in January from December,
while the annual rate of increase slowed to 2.7%, adding to
evidence of a slowdown in Canada's once red-hot housing market.
It follows data on Tuesday showing that Canada's annual
inflation rate eased more than expected in January to 5.9%.
The price of oil , one of Canada's major exports,
settled 3.2% lower at $73.95 per barrel as the prospect of
higher U.S. interest rates stoked concerns about fuel demand.
The Canadian 10-year eased 6.4 basis points to 3.377% after touching on Tuesday its highest intraday level in more than three months at 3.447%. (Reporting by Fergal Smith; Editing by Shounak Dasgupta and Richard Chang)
