Canadian dollar notches five-week high as investors cheer US CPI data

Canadian dollar notches five-week high as investors cheer US CPI data
Canadian dollar notches five-week high as investors cheer US CPI data

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

Wall Street rose and the US dollar fell against a basket of major currencies as US consumer prices increased less than expected in April.

“It is giving the market confidence that the Fed could be looking at cutting rates later in the year,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.

Canada is a major producer of commodities, including oil, so the currency tends to be sensitive to shifts in investor sentiment.

The price of oil settled 0.8% higher at $78.63 a barrel, while the Canadian dollar was trading 0.3% higher at 1.36 per US dollar, or 73.53 US cents. The currency touched its strongest intraday level since April 10 at 1.3592.

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

Canadian home sales declined 1.7% in April from March, and were up 10.1% on an annual basis, data from the Canadian Real Estate Association (CREA) showed.

Canadian bond yields tumbled across the curve, tracking moves in US Treasuries. The 10-year was down 10.3 basis points at 3.583%, approaching the bottom of the range in recent weeks.

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