The Canadian dollar CADUSD fell against its U.S. counterpart on Wednesday as the prospect of additional interest rate hikes by the Federal Reserve weighed on investor sentiment and domestic data showed weakening in the housing market.
Wall Street was mixed and the U.S. dollar rose against a basket of major currencies after the release of stronger-than-expected U.S. retail sales data, which could offer more room for the U.S. central bank to raise interest rates.
It followed data on Tuesday showing U.S. inflation that was stickier than expected.
The price of oil, one of Canada’s major exports, was also pressured by expectations of further interest rate hikes as well as signs of ample U.S. supplies.
U.S. crude prices settled down 0.6% at $78.59 a barrel, while the Canadian dollar was trading 0.4% lower at 1.3390 to the greenback, or 74.68 U.S. cents, after touching its weakest level since Friday at 1.3440.
Canadian home sales fell 3% in January from December and were down 37.1% on an annual basis after a rapid increase in borrowing costs since March last year.
Housing starts were also down in January, falling 13% from the previous month in a sign that building activity has started to cool.
Data for December showed a decline of 1.5% for factory sales and a drop of 0.8% for wholesale trade.
Canadian government bond yields climbed across a steeper curve. The 10-year touched its highest level since Dec. 30 at 3.312% before dipping to 3.291%, up 10.5 basis points on the day.