TORONTO: The Canadian dollar weakened to a nearly ten-week low against its US counterpart on Wednesday and was on track to post its biggest monthly decline since the Alberta wildfire, one day after Ottawa balked at a response to US tax reform.
At 4:30 p.m. EST (2100 GMT), the Canadian dollar was trading 0.4 percent lower at C$1.2829 to the greenback, or 77.95 US cents. It touched its lowest since Dec. 20 at C$1.2841.
For the month, the loonie was down 4.2 percent, the currency’s worst performance since wildfires ripped through Alberta’s oil sands region in May 2016. Oil is one of Canada’s major exports.
Finance Minister Bill Morneau’s third budget, released on Tuesday, outlined slight deficit improvements without much in the way of new spending, refusing to blink in the face of US corporate tax cuts that could hurt Canada’s competitiveness and an uncertain outlook for the North American Free Trade Agreement.
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“Some people in the market expected some kind of a response from our government and they didn’t get that,” said Hosen Marjaee, senior managing director, Canadian fixed income at Manulife Asset Management. “It seems like going forward we don’t have a lot going for us in terms of engines of growth.”
The pace of capital expenditures in Canada is expected to cool in 2018 as a slowdown in spending intentions from the public sector are offset by increased investment in machinery and equipment, data from Statistics Canada showed.
Figures for Canada’s fourth-quarter economic growth will be released on Friday, with analysts expecting the annualized rate to come in below the Bank of Canada’s 2.5 percent forecast.
Losses for the loonie came as the US dollar climbed to a five-week high against a basket of major currencies. The greenback was buoyed by an upbeat assessment of the US economy from the Federal Reserve’s new chairman.
US crude oil futures settled 2.2 percent lower at $61.64 a barrel after data showing a build in US crude inventories.
Source: Brecorder.com
