The Canadian dollar strengthened against the American one on Thursday after the US dollar retreated from its 18-month high.
The Canadian dollar strengthened against the American one on Thursday. This happened against the backdrop of the US dollar retreating from its 18-month high. However, a sharp jump in US producer prices heightened concerns about persistent inflation and a possible further tightening of Federal Reserve policy.
The US dollar exchange rate against the Canadian dollar fell by 0.29 percent and amounted to 1.4197 Canadian dollars around 15:24 Moscow time. The pair traded in the range from 1.4195 to 1.4241 Canadian dollars. The decline in the rate reflects the strengthening of the Canadian currency.
The Producer Price Index for final demand in the US rose by 1.3 percent in September compared to the previous month. This significantly exceeded economists' expectations of 0.6 percent. In August, growth was 0.5 percent. Year-on-year, the index rose by 6.3 percent versus 5.6 percent in August and a forecast of 5.3 percent. Such data indicate increasing price pressure in the US economy.
These figures came after higher-than-expected consumer price inflation in the US. They heightened concerns that persistent inflation could force the Federal Reserve to maintain tight monetary policy for longer.
The US Dollar Index fell by 0.2 percent to 102.03 earlier on Thursday. This partially offset the gains from the previous session. The decline in US Treasury yields provided temporary support to the Canadian currency.
Now investors will assess whether the latest inflation data reinforces expectations of another rate hike by the Federal Reserve. This could again put pressure on the Canadian dollar, as currency markets are influenced by interest rate differentials and global risk sentiment.