Loonie Slips on Fed Hike Bets Amid Stronger US Inflation

The Canadian dollar has hit a nine-day low after the latest US inflation data sparked bets that the Federal Reserve could raise interest rates soon.

The loonie slipped by about 0.2% to around 1.3862 per US dollar, with a brief touch of 1.3883 according to Reuters.

The immediate driver behind this move was the stronger-than-expected US inflation reading, which led investors to expect higher US policy rates and subsequently pulled global money towards US assets, lifting the greenback.

Canada's Bank of Canada Governor Tiff Macklem recently stated that officials could raise interest rates more than once if inflation stays high, but despite this, markets remain focused on the gap between Canadian and US short-term yields.