Canadian Dollar Steadies Near Five-Week Low as Oil Falls
The Canadian dollar remained near a five-week low of 1.3750 per U.S. dollar on Wednesday as crude oil prices dropped 6.5% following reports of progress in Middle East negotiations. Recent softer-than-expected inflation data continues to weigh on the currency as markets lower expectations for Bank of Canada rate hikes.
Canada's dollar steadied near a five-week low, trading nearly unchanged at 1.3750 per United States dollar on Wednesday. The currency faced pressure from a 6.5% drop in crude prices and softer-than-expected domestic inflation. This shift suggests the USD/CAD pair remains sensitive to narrowing interest rate differentials as Canadian price pressures ease.
### Inflation Miss Cools Rate Hike Expectations The loonie hit an intraday low of 1.3778, its weakest level since April 15, following data showing the April CPI increased at an annual rate of 2.8%. This figure trailed the 3.1% forecast and triggered a repricing in the swap market. Traders now price in 40 basis points of tightening from the Bank of Canada this year, down from 54 basis points prior to the report.
