The Canadian dollar slumped to multi-week lows against the US dollar and the Japanese yen in early New York trading on Wednesday as crude oil prices fell below the $78 barrel mark.
The price of crude oil edged down $1.06 to $77.96 per barrel in the session as traders expect tomorrow's Energy Information Administration data on weekly crude oil inventories on US energy stockpiles to show an increase, which would indicate weaker demands. The inventories report is due for release on Thursday, one day later than normal owing to a US holiday on Monday.
On Tuesday, the Organization of the Petroleum Exporting Countries said in its January report that oil demand in 2010 was forecast to grow by 0.8 million barrels per day to average 85.1 million barrels per day.
In economic news, the rate of inflation in Canada remained within targets levels set by the Bank of Canada in December, as consumer prices fell very slightly from the previous month.
On a seasonally adjusted monthly basis, the CPI fell 0.3% from November to December, after rising 0.5% from October to November, according to data released today by Statistics Canada.
On an annual basis, consumer prices rose 1.3% in the 12 months to December, following a 1.0% increase in November. The agency noted that December's on-year increase was the largest since February 2009.
In a separate report, the Statistics Canada said that the Canadian manufacturing sales edged up 0.1% to $42.6 billion in November. Economists were expecting a much larger increase of 1.4%, after October's increase of 2%.
Yesterday, the Bank of Canada kept its overnight lending rate at 0.25 percent and repeated its conditional commitment to maintain that level until the end of the second quarter.
The Canadian dollar dropped more than 1.2 percent to a 16-day low of 1.0491 against the US dollar by 9:35 am ET from yesterday's close of 1.0316. On the downside, support is likely to be seen around the 1.0590 level for the loonie. Currently, the greenback-loonie pair is trading at 1.0485.
In the U.S., the Labor Department said its producer price index edged up by 0.2 percent in December following an unrevised 1.8 percent increase in November. Economists had been expecting prices to come in unchanged after the sharp jump in the previous month.
Excluding the changes in food and energy prices, core producer prices were unchanged in December after increasing by 0.5 percent in the previous month. Core producer prices had been expected to edge up by 0.1 percent.
Meanwhile, the Commerce Department said in a report that housing starts fell 4.0 percent to an annual rate of 557,000 in December from the revised November estimate of 580,000. Economists had been expecting starts to edged down to 572,000 from the 574,000 originally reported for the previous month.
The Canadian dollar pared most of its Asian session gains against the common currency in early New York trading and dropped 1 percent to a 5-day low of 1.4822 around 8:55 am ET. The euro-loonie pair, which closed yesterday's deals at 1.4739, is presently worth 1.482 with 1.484 seen as the next target level.
The German PPI for December released at 2:00 am ET did not influence the European currency much.
The Bank of Italy said in a report that the current account deficit stood at EUR 4.57 billion in November, narrowing from a EUR 4.92 billion deficit recorded a year ago.
Jurgen Stark, a member of the European Central Bank's Executive Board, said today that the ECB will not change its rules to help member states with high budget deficits such as Greece.
The loonie slumped to a 4-week low of 86.62 against the Japanese yen before reversing its direction around 8:50 am ET. The loonie-yen pair, which finished Tuesday's trading lower at 88.4, is presently quoted at 87.27. If the domestic unit declines further, it may test support around the 86.0 level.
Earlier in the day, a government report revealed that the index measuring tertiary industrial activity in Japan declined by a seasonally adjusted 0.2% in November, compared to the previous month, coming in at 96.6.
Separately, a final report released by Japan Machine Tool Builders' Association revealed that machine tool orders surged up 63.4% year-on-year during December, marginally higher than a 62.8% rise projected in an earlier preliminary report.
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May 15, 2026 15:25 ET Apart from the confirmation of Kevin Warsh as the next Fed chair, the main news on the economics front this week included key price data from the U.S. and the first quarter economic growth figures from major economies. Both consumer prices and producer costs have started to reflect the effect of supply shocks due to the Middle East conflict. In Europe, GDP data was in focus, while inflation data from China dominated the news flow in Asia.