Canadian dollar weakens 0.3% against the greenback
Touches its weakest level since Jan. 6 at 1.3537
Canadian producer prices rise 0.4% in January
10-year yield touches a seven-week high
TORONTO, Feb 17 (Reuters) – The Canadian dollar weakened to a six-week low against its U.S. counterpart on Friday as the prospect of the Federal Reserve remaining hawkish weighed on risk appetite globally, while domestic data showed a surprise increase in producer prices.
Stock markets dropped and the U.S. dollar climbed against a basket of major currencies after U.S. economic data this week that indicated inflation pressures could be stickier than investors had previously thought, dashing hopes the Fed would soon pause its aggressive campaign to raise interest rates.
The price of oil, one of Canada’s major exports, was pressured by concerns about more Fed tightening that could weigh on demand, and signs of ample supply. U.S. crude prices were down 3.2% at $75.97 a barrel.
The Canadian dollar was trading 0.3% lower at 1.3495 to the greenback, or 74.10 U.S. cents, after touching its weakest level since Jan. 6 at 1.3537. For the week, it was on track to decline 1.1%.
The Bank of Canada has also tightened at a rapid pace. On Thursday, Governor Tiff Macklem said the economy remains overheated and the jobs market is too tight, as he kept the door open to future rate increases.
Money markets have nearly fully priced in an additional hike by the BoC this year after having expected the next move to be a cut before a blowout Canadian jobs report last Friday. Producer prices in Canada rose by 0.4% in January from December, Statistics Canada said on Friday. Analysts had forecast a decrease of 0.1%. Separate data showed that foreign investors bought a net C$21.2 billion ($15.7 billion) in Canadian securities in December.
The Canadian 10-year yield touched its highest level since Dec. 30 at 3.328% before dipping to 3.305%, up 2.3 basis points on the day. (Reporting by Fergal Smith; editing by Jonathan Oatis)