Loonie little changed, markets look to Fed minutes, Canadian inflation data

TORONTO – The Canadian dollar was little changed Wednesday amid sharp drops in metal prices and ahead of the afternoon release of the minutes from the U.S. Federal Reserve’s latest interest rate meeting.

The loonie was off 0.01 of a cent to 91.74 cents US.

Investors will scrutinize the minutes of the Fed’s April 12 meeting at 2 p.m. EDT. They could shed further light on what the Federal Reserve’s intentions are about raising interest rates.

Fed chairwoman Janet Yellen noted earlier this month that the U.S. job market remains “far from satisfactory” and inflation below the Fed’s target rate. Yellen said that she expects low borrowing rates will continue to be needed for a “considerable time.”

She has also said that geopolitical tensions, a renewal of financial stress in emerging markets and a faltering housing recovery are potential threats.

On the commodity markets, July crude in New York gained 78 cents to US$103.11 a barrel.

Metals were weak as July copper slid four cents to US$3.11 a pound while June gold faded $4.80 to US$1,289.80 an ounce.

The economic calendar was light Wednesday, but markets are looking ahead to two major economic reports this week.

The March reading on retail sales comes out Thursday and economists are looking for a rise of 0.3 per cent.

On Friday, markets will look to the latest inflation data and in turn what effect the reading could have on the Bank of Canada’s interest rate announcement in early June.

“Friday’s inflation print will be a core input for judging BoC policy going forward,” observed Camilla Sutton, Chief FX Strategist, Managing Director Scotiabank Global Banking and Markets.

“Currently the market is pricing in no chance of an interest rate cut or hike in the next 12-months.”

Economists expect the inflation data will show that the consumer price index rose two per cent year over year during April, up from the 1.5 per cent reading registered in the previous month.