CANADA’S FX DEBT – Canadian dollar hits 7-week low as Fed forecast shakes markets

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(Add dealership quote and activity details; update pricing) * Canadian dollar drops 0.6% against greenback * At its lowest since April 28 at 1.2378 * Canadian home prices accelerate in May vs. previous month curve By Fergal Smith TORONTO, June 17 (Reuters) – The Canadian dollar weakened for a third day against its significantly stronger US counterpart on Thursday, after a The US Federal Reserve’s hawkish shift in focus surprised investors. The loonie was trading down 0.6% to 1.2355 against the greenback, or 80.94 cents US, adding to the declines on Tuesday and Wednesday. It hit its lowest level since April 28 at 1.2378. “The Canadian dollar was hammered as the prospect of two rate hikes in the United States erased the advantage the currency had enjoyed as the Bank of Canada only forecast rate hikes,” said Rahim Madhavji, president of KnightsbridgeFX.com, in a note. On Wednesday, a majority of 11 Fed officials forecast at least two quarter-point rate hikes for 2023, propelling the US dollar to a two-month high against a basket of major currencies. Previous forecasts predicted the first hike to come in 2024. Canada is a major producer of commodities, especially copper and oil, which have benefited from the Federal Reserve’s stimulus measures. Copper prices fell to their lowest level in two months, while oil fell 1.5% to $ 71.04 a barrel. The Bank of Canada is starting to see signs that the country’s scorching real estate market is cooling off, although a return to normalcy will take time, Governor Tiff Macklem said on Wednesday. Canadian home prices accelerated further in May from the previous month, posting the largest monthly increase in the history of the Teranet-National Bank Composite Home Price Index, data showed Thursday. Statistics Canada data showed that foreign investors bought C $ 9.95 billion net of Canadian securities in April, mostly government bonds. Canadian government bond yields have been mixed on a flatter curve. The 10-year rate eased 4.8 basis points to 1.394%, erasing much of the previous day’s rise. (Reporting by Fergal Smith, editing by Nick Zieminski and Aurora Ellis)



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