CANADA FX DEBT – Canadian dollar hits 5-week high as investors welcome US CPI data.

CANADA FX DEBT – Canadian dollar hits 5-week high as investors welcome US CPI data.
CANADA FX DEBT – Canadian dollar hits 5-week high as investors welcome US CPI data.

The Canadian dollar strengthened to a five-week high against its U.S. counterpart on Wednesday as investors welcomed U.S. inflation data that could keep the door open for interest rate cuts from the Federal Reserve this year.

Wall Street rose and the U.S. dollar fell against a basket of major currencies after U.S. consumer prices rose less than expected in April.

“This gives the market some confidence that the Fed may consider cutting rates later in the year,” said Darren Richardson, chief operating officer of Richardson International Currency Exchange Inc.

Canada is a large producer of raw materials, particularly oil, and so its currency tends to be sensitive to changes in investor sentiment.

The price of oil settled at $78.63 per barrel, up 0.8%, while the Canadian dollar traded at $1.36 per US dollar, or 73.53 US cents, up by 0.3%. The currency hit its highest intraday level since April 10 at 1.3592.

Favorable winds are expected to keep a major wildfire away from the Canadian tar sands city of Fort McMurray, authorities said, less than a day after 6,000 people were ordered to leave.

Home sales in Canada fell 1.7% in April compared to March, and increased 10.1% on an annual basis, according to data from the Canadian Real Estate Association (CREA).

Canadian bond yields fell across the curve, following movements in US Treasuries. The 10-year yield fell 10.3 basis points to 3.583%, approaching the lowest level of the range in recent weeks. (Reporting by Fergal Smith, editing by William Maclean)

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