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Canadian Dollar Weakens as Crude Sell Off Continues; Fed Minutes Boost USD

Published 2022-07-06, 02:33 p/m
Updated 2022-07-06, 02:37 p/m
© Reuters.

© Reuters.

By Ketki Saxena 

Investing.com -  The Canadian dollar weakened against its U.S. counterpart for a second consecutive day, the loonie remained pressured by heavy-sell offs in crude, while demand for the safe-haven US dollar was further boosted by rising U.S. yields and the release of hawkish minutes from the Federal Reserve. 

The USD/CAD pair 0.19% higher at C$1.3061 to a greenback as of 2:30 p.m ET, following the release of minutes from the Federal Reserve’s last meeting. The much-awaited minutes down on the need to fight entrenched inflation, which the world’s most central bank considers a greater risk than triggering a recession in an already cooling economy. 

The minutes also noted that “an increase of 50 or 75 basis points would likely be appropriate at the next meeting. U.S. bond yields were higher across the surged immediately following the news but remained below the 3% mark. 

The falling price of crude - one of Canada’s key imports - also weighed on the loonie, as recession-driven demand destruction fears gained the ascendancy over worries of tight supply. Worries of lower demand are being further exacerbated by another wave of a new Covid-19 variant in China, and the possibility of renewed lockdowns in Shanghai. 

Canadian yields were also higher across the curve tracking the move in U.S. treasuries. Yields on the Canadian 2 year were +0.118 points higher at 3.135%, yields on the 5 year were 0.144 points higher at 3.093%, and yields on the 10 year were 0.127 points higher at 3.204%.

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