TORONTO: The Canadian dollar extended its losses versus its US counterpart on Thursday, touching a six-week low, after oil prices slid and inflation figures came in as expected a day earlier, in contrast to upside surprises in other countries.
At 9:25AM EST (1425 GMT), the loonie was trading 0.6% lower at 1.2615 to the greenback, or 79.27 US cents, having earlier touched its weakest level since Oct. 6 at 1.2627. “The previous tailwinds for the loonie rally have recently switched,” said Simon Harvey, FX market analyst for Monex Europe and Monex Canada.
The Canadian dollar slumped on Tuesday after domestic data showed inflation rising at 4.7% in October, which was spot on market expectations. “In normal times, when you’ve got 4%-plus inflation it would be quite positive for a currency,” said Harvey.
“But it came in at a time when G10 inflation is surprising to the upside consistently, whether it’s the US, the UK or just globally, so the idea that Canadian inflation came in as expected was actually a bit of a weight on Canadian front-end bond yields.”
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