The Canadian dollar weakened against its US counterpart on Wednesday, while the greenback posted broad-based gains, with the Canadian currency failing to build on the boost provided by the previous day’s domestic inflation data.
The loonie was trading 0.3% lower at 1.37 per US dollar, or 72.99 US cents, after trading in a range of 1.3651 to 1.3704.
On Tuesday, the currency hit its strongest intraday level in three weeks at 1.3626, as Canadian inflation unexpectedly accelerated to an annual rate of 2.9% in May from 2.7% in April, reducing expectations that the Bank of Canada would cut interest rates further next month.
“The market was caught off guard yesterday by the CAD failing to build on early gains,” said George Davis, chief technical strategist at RBC Capital Markets.
The broad-based strength of the US dollar has contributed to USD-CAD rising today, Davis added.
The US dollar rose against a basket of major currencies, while the yen fell to its lowest level against the greenback since late 1986.
Preliminary data showed that Canadian wholesale trade fell 0.9% in May from April, while the price of oil, one of Canada’s main exports, rose 0.7% to $81.42 a year. barrel.
Canadian government bond yields rose across the curve, adding to the previous day’s move. The 10-year bond rose 8.2 basis points to 3.464%, after earlier hitting its highest level since June 11, 3.476%. (Reporting by Fergal Smith; Editing by Andrea Ricci)
