Canadian Dollar Weakens On Interest Rate Concerns

(RTTNews) - The Canadian dollar dropped against its major counterparts in the European session on Thursday, as hawkish comments from major central bankers raised concerns about the interest rate outlook and the likelihood of a recession.

U.S. Fed Chair Jerome Powell and heads of other top central banks indicated that further policy tightening will be required to tame stubbornly high inflation.

Powell said that interest rates will stay high and would not rule out two rate hikes at consecutive meetings.

Investors fear that persistently tight monetary policies of central banks could trigger a slowdown in global growth.

European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey made hawkish remarks while in contrast, Bank of Japan Governor Kazuo Ueda noted that there's still some distance to go to consider an exit from ultra-easy stimulus.

The loonie touched 1.3278 against the greenback, its lowest level since June 5. The currency may locate support around the 1.34 level.

The loonie fell to 1.4492 against the euro and 108.63 against the yen, from its early highs of 1.4443 and 109.01, respectively. The next possible support for the currency is seen around 1.46 against the euro and 104.00 against the yen.

The loonie eased to 0.8794 against the aussie, from an early multi-month high of 0.8742. If the currency falls further, 0.90 is likely seen as its next support level.

Looking ahead, at 8:00 am ET, German preliminary CPI for June is scheduled for release.

U.S. GDP data for the first quarter, weekly jobless claims for the week ended June 24 and pending home sales for May are due in the New York session.