The Canadian dollar CADUSD weakened to an eight-day low against its U.S. counterpart on Thursday as stronger-than-expected U.S. inflation data spooked investors counting on the Federal Reserve to begin cutting interest rates this year.
Bond yields climbed and Wall Street’s major indexes fell as U.S. data showed retail sales rebounding less than expected in February as well as producer prices rising 0.6%. It follows U.S. consumer price data on Tuesday that was also heated.
“These hotter inflation readings mean that there is a lingering risk that the Fed won’t cut this year and that’s causing some jitters across markets,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.
“For CAD specifically, higher yields, lower retail sales and lower equities is a negative mix.”
Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to shifts in investor sentiment.
The Canadian…
