C$ touches two-week low on domestic data
TORONTO (Reuters) - Canada's dollar stumbled on Wednesday as the U.S. dollar gained broadly and as unexpectedly low Canadian inflation data lessened the chances that the Bank of Canada will raise interest rates any time soon.
The currency touched its lowest level in just over two weeks against its U.S. counterpart at C$1.0489 to the U.S. dollar, or 95.34 U.S. cents, following the data.
The consumer price index slipped 0.3 percent in December from November, Statistics Canada said on Wednesday, and 12-month inflation was 1.3 percent, lower than expected. Core CPI, closely watched by the central bank, also came in slightly weaker than expected with a decline of 0.3 percent in the month for an annual rate of 1.5 percent.
In a separate report, Canadian manufacturing sales advanced less than expected in November from October as weakness in the automotive and aerospace sectors offset gains in most other industries, Statistics Canada said.
George Davis, chief technical strategist at RBC Capital Markets, said the weakness in the inflation data takes any kind of pressure off the Bank of Canada to act sooner rather than later on raising rates.
"I think from a shorter-term perspective we might see a little more Canadian dollar weakness in reaction to that," he said.
At 10:19 a.m. (1519 GMT), the Canadian dollar was at C$1.0469 to the U.S. dollar, or 95.52 U.S. cents, down from Tuesday's finish of C$1.0307 to the U.S. dollar, or 97.02 U.S. cents.
Another key factor driving the Canadian currency lower on Wednesday was a jump in the greenback, which was given a boost from expectations the election in Massachusetts of a Republican to a U.S. Senate seat might see the government rein in spending and cut the fiscal deficit.
"We're seeing the U.S. dollar outperform across the board," said J.P. Blais, vice president of foreign exchange products at BMO Capital Markets. Continued...