Canadian dollar steadies ahead of domestic inflation data
The loonie was trading nearly unchanged at 1.3814 per U.S. dollar, or 72.39 U.S. cents, after moving in a range of 1.3784 to 1.3831.
Canada's consumer price index report for July is due on Tuesday. Economists expect the annual rate of increase in consumer prices to ease to 1.8% from 1.9% in June, but measures of underlying inflation that are closely tracked by the BoC are forecast to remain well above the central bank's 2% target.
"Tomorrow's Canadian inflation report should remain too hot for comfort," Karl Schamotta, chief market strategist at Corpay, said in a note.
"The central bank's preferred trim and median core measures are likely to hold close to the 3% threshold for now as retaliatory tariffs and still-resilient consumer spending levels translate into upward pressure on prices."
Investors see a 68% chance that the BoC would leave interest rates unchanged at its next policy decision on September 17. The central bank has been on hold since lowering the benchmark rate to 2.75% in March.
The price of oil , one of Canada's major exports, was up 0.5% at $63.11 a barrel, while the U.S. dollar (.DXY), opens new tab notched gains against a basket of major currencies.
Canadian housing starts unexpectedly rose in July, advancing 4% from the previous month, data from the national housing agency showed.
Data on Friday from the U.S. Commodity Futures Trading Commission showed that speculators have raised their bearish bets on the Canadian dollar to the highest level since June.
The Canadian 10-year yield was up 2.7 basis points at 3.489%, after earlier touching its highest level since July 30 at 3.506%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
9 minutes ago
- Reuters
Coty forecasts fall in quarterly sales, to raise premium fragrance prices
Aug 20 (Reuters) - Coty (COTY.N), opens new tab on Wednesday forecast a drop in current-quarter sales as weak spending in the U.S. sapped demand for beauty products, and said it would raise prices for its premium fragrances to mitigate tariff costs. The company's shares were down 16% in extended trading after it also posted a surprise fourth-quarter loss. Coty will raise prices in its premium fragrances unit in the U.S. and onshore some production to cushion the impact of the 15% duties on imports from Europe under U.S. President Donald Trump's tariffs policy, executives said. Retailers in the U.S. are increasingly cautious due to tariffs and are destocking inventories as cost-conscious consumers tighten spending on some beauty and skincare products. Coty expects first-quarter like-for-like sales to decline 6% to 8%, compared with 4.5% growth a year ago and said product launches should drive sales growth in the second half. "Our analysis of cosmetics category weakness points to value-seeking behavior, some fatigue with innovation as consumers circle back to basics and less frequent usage, particularly with Gen-Z migrating to fragrances," finance chief Laurent Mercier said in a statement. Changes in the immigration policy under the Trump administration has also contributed to the slowdown in the country, Mercier added. Coty also said it has invested disproportionately in its U.S. mass beauty business at the expense of more profitable fragrances unit. The company would reallocate investment in fragrances instead of mass beauty, which has struggled of late due to intense competition from cheaper products online. Coty reported an adjusted quarterly loss of 5 cents per share, compared with analysts' estimates of a profit of 2 cents per share, according to data compiled by LSEG. The loss included a negative impact from an equity swap mark-to-market of $0.07 due to the stock price decline in the quarter, the company said. Beauty retailer Estee Lauder (EL.N), opens new tab also gave a weak annual profit forecast on Wednesday. The company's fourth-quarter revenue fell 8% to $1.25 billion, but beat estimates of $1.20 billion.
Daily Mail
2 hours ago
- Daily Mail
Traders bet on no more rate cuts this year: Blow for borrowers as inflation hits 18-month high of 3.8%
Millions of borrowers were dealt a bitter blow yesterday as soaring inflation shattered hopes of an interest rate cut. Markets are now betting that rates will remain unchanged for the rest of the year after higher air fares, fuel and food prices pushed consumer price inflation to 3.8 per cent, up from 3.6 per cent in June. That was the highest level in 18 months and above forecasts of 3.7 per cent. It means prices in Britain are rising more quickly than anywhere else in the G7 group of advanced economies. And it piles pressure on the Bank of England – and governor Andrew Bailey – which is tasked with keeping inflation at 2 per cent. It is also a blow to Rachel Reeves, whose faltering stewardship of the economy has seen growth slow in recent months and unemployment rise by more than 200,000 since Labour came to power. Experts said the Chancellor's £25billion employer National Insurance raid, as well as a sharp increase in the minimum wage bore much of the blame for the rise in inflation as firms pass on higher costs to consumers. The Bank has already been turning more hawkish as it voted to cut rates to 4 per cent last month by the narrowest of margins. And it has also warned inflation will continue to rise, hitting 4 per cent by the end of this year. Last night, market betting suggested there was a near zero chance of a rate cut next month and just a one-in-four likelihood that the BoE will reduce rates in November. Traders also saw a 56 per cent probability of rates being held in December, meaning borrowers are likely to have to wait until February 2026 for any relief. Fears of persistent inflation have sent UK borrowing costs higher in recent days with yields on 30-year bonds, known as gilts, rising to the highest level since 1998 earlier this week. The sell-off in bonds – whose yields rise as prices fall – has since abated. But UK borrowing costs continue to be higher than those of other advanced economies. Yesterday's inflation figures are likely to have particularly concerned the Bank of England's rate-setting Monetary Policy Committee (MPC) because of an unexpectedly big jump in services sector prices – a metric that the Bank watches closely. Services sector inflation rose from 4.7 per cent in June to 5 per cent in July. The Bank has been steadily cutting rates since last summer after a bout of spiralling price rises – that saw inflation hit more than 11 per cent – appeared to have been brought under control as it came down to around 2 per cent. But it has since drifted upwards causing doubts that the Bank can continue on the same path. Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said: 'Inflation is set to stay miles above target for the foreseeable future. We expect headline inflation to remain above 3 per cent until April 2026, forcing the MPC to stay on hold for the rest of this year at least.' Expectations that rates will stay higher for longer are likely to have an impact on fixed rate mortgage deals. David Hollingworth, associate director at L&C Mortgages, said: 'Mortgage borrowers have been enjoying a market where rates have been dropping. 'Fixed rates have been pricing in the recent and future cuts, so have been edging down with a host of deals now below 4 per cent. 'Those reductions have tended to come in small increments, but we could see that slow further or even reverse in some cases if the market reacts badly to the threat of higher inflation than was previously expected.'
Daily Mail
2 hours ago
- Daily Mail
Inflation keeps climbing and Labour isn't bold enough to do what's needed to be done, MAGGIE PAGANO
Only a hermit living on a desert island could not have known that inflation was rising sharply again. Which is why it was such nonsense to hear economists saying yesterday that the latest leap in prices for July came in higher than expected. They really were not. Any business owner or regular shopper – or indeed anybody who lives in the real world – could have told them weeks ago that prices were jumping up across the board. You can see it daily in your food shop or when you are filling up with fuel, or as the latest figures show, going on an overseas summer holiday. According to the Office for National Statistics (ONS), the rise to 3.8 per cent for the year to July – the highest level since January last year – was driven mainly by higher prices for food, transport and flying. The ONS says that much of the increase is because of an astonishing 30.2 per cent rocketing of air fares, the highest jump in that period for more than two decades. What we don't know is whether all of the increase was due to airlines bumping up prices to take advantage of the school holidays, in other words another example of greed inflation. Or because global prices for jet fuel shot up. It appears to be a bit of both. The global Jet Fuel Monitor shows a small uptick in prices on the month. Other products that also rose month-on-month were those for beef, chocolate, fresh orange juice and instant coffee, rises more easily understood as they relate to higher energy and labour costs directly due to the tax hikes in the last Budget. So it was no surprise at all to see food and non-alcoholic drink inflation rising to 4.9 per cent in the year to July, the fourth month in a row, taking prices to their highest since the start of last year. The more interesting question to ask is why UK inflation remains so very sticky, and why we are such an outlier compared to our European neighbours. Those who have been able to afford to fly abroad will know all too well that UK prices are rising four times as fast as France, and twice as high as those in Italy and Germany. By far the biggest factor is the UK's reliance on imported energy, particularly gas, which under our 'marginal pricing' system means that the gas price sets the rate of other energy sources. Gas provides about 40 per cent of the UK's electricity and is used to heat 85 per cent of our homes. And gas prices are still far higher than before Russia's invasion of Ukraine, which sent gas prices spiralling, and the UK's government-set price cap soaring. Then you also have the huge subsidies going into renewables. Most European countries are nowhere near so dependent on gas. Fewer than half of French and German homes are heated with gas. At the same time, most of their housing stock is much better insulated than ours. Worker shortages in key industries such as hospitality, farming and agriculture and transport is another big factor, pushing up wages and therefore inflation as businesses pass on the cost. And these are shortages which have become more acute since the pandemic and made worse through over-regulation and hobbled now by higher taxes. Yet we have hundreds of thousands, if not millions of individuals, the so-called 'economically inactive', who could be filling many of these vacancies. And the reason they are not willing – or able – to do so is partly because of our generous yet rigid welfare system but also because far too many either lack the skills or indeed the confidence to return to the workplace. Interestingly, most European countries recovered more quickly from the lockdowns, and have not seen such a crippling impact on the workplace or on wage increases. Maybe their compensation schemes were not so generous? Whatever the reason, UK prices remain stubbornly high and have further to rise despite money supply growth having slowed down. This means that bond yields will stay high and interest rates are not coming down anytime soon. Even that last cut was too little, too late. Yet there is so much that could be done to improve the more sclerotic parts of the economy with bold and brave reforms. Tragically, we don't seem to have the politicians capable of carrying them through. Even worse, they don't seem to understand what's needed to do so.
