By KetkI Saxena
Investing.com -- The Canadian dollar weakened against its U.S. counterpart on Thursday, pressured by falling oil prices d Bank of Canada (BoC) Governor Tiff Macklem's reluctance to support the market's recent expectations for another interest rate hike by the central bank.
In response to April's inflation increase - marking the first in ten months - Macklem suggested it was an anomaly and predicted consumer prices would continue their downward trajectory following the release of BoC's financial system report.
Inflation has come down. It is coming down. We expect it will continue to come down," Macklem stated when asked about recently published inflation figures.
Macklem acknowledged that inflation in April rose by more than anticipated but refrained from further discussing monetary policy.
Prior to his comments, money markets estimated an 80% chance of a July rate hike; however, this probability dropped to 60% following his remarks, pressuring the loonie. Before Tuesday’s release of April inflation data, the discourse had been surrounding whether or not a rate cut might be more likely than a hike.
Meanwhile, the US dollar strengthened across the board as a solution for the US debt ceiling deadlock appears to be on the cards, and after Initial Jobless Claims rose below estimates, raising investors to consider if the data may deter Federal Reserve officials from pausing due to the tightness of the labor market. Furthermore, Dallas Fed President Lorie Logan sounded a hawkish note, further raising bets that the Fed may be forced to hike again, noting that data this time does not support skipping rate hikes at the next meeting,