A Canadian dollar or loonie.Jonathan Hayward/The Canadian Press
The Canadian dollar was lower Tuesday as U.S. inflation figures for June came in as expected.
The loonie was down 0.14 of a cent to 93.06 cents US, off early lows as the U.S. Labor Department reported that the consumer price index rose 0.3 per cent during June, which matched economists' expectations.
Analysts note that readings on U.S. inflation are considered key these days to get a clue as to when the Federal Reserve might start hiking rates since the American employment situation has improved so much over the last few months.
And there was speculation that a higher than expected inflation reading would have pulled forward expectations for when the U.S. Federal Reserve will start hiking interest rates.
Scotiabank's Camilla Sutton observed in a commentary Tuesday that Fed funds futures are pricing in a conservative July 2015 interest rate hike, while "our Scotiabank house view is for Q215."
"There has been a bit of back and forth with expectations for the first interest rate hike with it being pulled forward and then pushed back," said Sutton, chief FX strategist and managing director Scotiabank Global Banking and Markets.
Many analysts expect the Bank of Canada could also begin hiking rates next summer.
Meanwhile, geopolitical concerns eased somewhat as traders considered the impact of potentially tighter economic sanctions against Russia for its support of Ukrainian rebel militias blamed for shooting down a Malaysian airliner last week.
European Union foreign ministers are meeting Tuesday to consider ratcheting up sanctions. But many investors worry about how such sanctions could impact what has been a fragile economic recovery in Europe.
Meanwhile, there was relief as pro-Moscow separatists released a train packed with bodies and handed over the aircraft's black boxes.
On the commodity markets, September copper rose two cents to US$3.22 a pound.
September crude contract on the New York Mercantile Exchange slipped 39 cents to US$102.47.
August bullion declined $8 to US$1,305.90 an ounce.