Canadian Dollar Weakens as US Inflation Data Reinforces Rate Hike Expectations
The Canadian dollar weakened against the US dollar on Friday after US inflation data showed underlying price pressures remained firm, reinforcing expectations that the Federal Reserve could raise interest rates next week.
According to the latest CPI report, US consumer prices rose 0.4% in August and were up 3.4% year-on-year, matching economists' expectations. Core CPI, however, increased 0.3% month-on-month, above the 0.2% forecast, while annual core inflation eased to 2.4% from 2.5% in July.
The data strengthened the case for the Fed to keep a restrictive stance even as annual core inflation cooled. Markets had already increased bets on a quarter-point rate hike at the Fed's Sept. 15-16 meeting following Thursday's stronger-than-expected producer price data.