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CANADA FX DEBT-Canadian dollar steadies near 19-month low ahead of US inflation data

By Reuters News

By Fergal Smith

TORONTO, Nov 12 (Reuters) - The Canadian dollar steadied near a 19-month low against its US counterpart on Thursday as investors awaited US producer price data that could support expectations for Federal Reserve interest rate hikes.

The loonie was trading nearly unchanged at 1.4257 per US dollar, or 70.14 US cents, after slumping to its weakest intraday level since April 2025 at 1.4331.

  • The US dollar rose to a 19-month high against a basket of major currencies as investors pushed Treasury yields higher following a hawkish reassessment of the Fed's interest-rate path.

  • "US inflation seems to be running hot and the Fed is expected to raise their interest rate making the USD more attractive," Darren Richardson, chief operating officer at Vantry Capital Inc, said in a note.

  • "Tomorrow, we have more US pricing data which may confirm more rate hikes from the Fed," Richardson said.

  • Economists expect US producer price index data, due on Friday, to show prices rising 6.6% year over year in October.

  • Investors have fully discounted a 25-basis point hike from the Fed in December and see some risk of a 50-basis-point move.

  • Chances that the Bank of Canada raises rates next month are seen at roughly 60%.

  • "Domestic rate expectations have firmed somewhat, however we attribute some of this to broader, external developments rather than any improvement in the domestic outlook," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.

  • Data last Friday showed that Canada's economy shed jobs for a third straight month in October.

  • The price of oil, one of Canada's major exports, rose on continued disruptions to shipping through the Strait of Hormuz. US crude futures settled 2.55% higher at $88.74 a barrel.

  • Canadian bond yields rose across a flatter curve as the market reopened following Wednesday's Remembrance Day holiday.

  • The 10-year was up 7.1 basis points at 3.788%. Still, it fell 4.9 basis points further below the equivalent US rate to a gap of about 132 basis points.

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