Loonie Weakens to Near 12-Day Low Amid Rising Rate Hike Expectations
The Canadian dollar has weakened to near its 12-day low against the US dollar on Monday, as steady domestic inflation offered little support while rising US rate-hike expectations and a stronger greenback outweighed the boost from surging oil prices.
Oil prices jumped above $108 a barrel on Monday due to fresh attacks and supply disruptions in the Middle East, which are intensifying concerns about global oil availability. However, this price increase is also reviving inflation concerns and strengthening the case for tighter US monetary policy.
The loonie's move comes as investors weigh sharply higher oil prices against growing expectations that the US Federal Reserve could raise interest rates this week. Markets are now pricing in roughly a 90% chance of a Fed rate hike, which has helped the US dollar rise broadly.