Monday, 16 November 2015 21:04
TORONTO: The Canadian dollar weakened to a fresh six-week low against the US dollar on Monday, driven by safe-haven strength for the greenback following the Paris attacks on Friday, and also by disappointing Canadian manufacturing data and lower crude oil prices.
At 9:10 a.m. ET (1410 GMT), the Canadian dollar was trading at C$ 1.3349 to the greenback, or 74.91 US cents, weaker than the Bank of Canada’s official close on Friday of C$ 1.3318, or 75.09 US cents, having hit a new six-week low at C$ 1.3356.
Canadian manufacturing sales fell by 1.5 percent in September to the lowest level since May, impacted by lower motor vehicle assembly and oil product sales, according to Statistics Canada data. Analysts surveyed by Reuters had forecast a 0.1 percent rise.
Crude oil was unable to sustain a rebound following the Paris attacks, reversing lower on the day.
US crude prices were down 0.20 percent to $ 40.66, while Brent crude lost 0.61 percent to $ 44.20.
More encouragingly for the Canadian economy, data from PayNet revealed that commercial borrowing by Canadian small businesses accelerated in September, rising 14 percent compared to the same month a year ago.
In addition, Canadian home sales rose 1.8 percent in October, leaving activity near the peak recorded earlier this year, according to the Canadian Real Estate Association.
Statistics Canada also reported that foreign investors bought C$ 3.35 billion in Canadian securities in September, mainly due to the resumption of the purchase of Canadian shares after two months of divestment.
The weak Canadian dollar offers an opportunity for exporters but also makes it harder for companies to buy machinery to upgrade their operations, new Finance Minister Bill Morneau said on Sunday, speaking on the margins of the Group of 20 summit in Turkey.
Canada’s new Liberal Prime Minister Justin Trudeau met China’s top leader on Monday, seeking to revive political ties and boost trade to help energize a faltering economy.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 1 Canadian cent to yield 0.606 percent and the benchmark 10-year rising 19 Canadian cents to yield 1.631 percent.
The Canada-US two-year bond spread was -22.9 basis points, trading 1.9 basis points narrower, while the 10-year spread was -62.3 basis points, trading 0.4 of a basis point narrower, as Treasuries outperformed on the potential for the Paris attacks to delay Fed tightening.
