TORONTO: The Canadian dollar was little changed against its US counterpart on Thursday after hitting its weakest in nearly one year earlier in the session, with lower oil prices and an uncertain outlook for trade weighing on the currency.
The price of oil, one of Canada’s major exports, fell as crude exporters in OPEC appeared to be nearing a deal to increase production. US crude prices were down 1.1 percent at $65.01 a barrel.
US stock index futures dipped as the impact of an ongoing trade spat between the United States and China began to appear in company earnings forecasts, while a media report said Beijing could target US blue-chip firms.
Canada runs a current account deficit so its currency could suffer if increased risk aversion disrupts the flow of capital.
At 9:11 a.m. EDT (1311 GMT), the Canadian dollar was trading nearly unchanged at C$1.3307 to the greenback, or 75.15 US cents. The currency touched its weakest level since June 22, 2017 at C$1.3336.
The loonie has also been pressured recently by slow-moving talks to renegotiate the North American Free Trade Agreement and a trade feud between the United States and Canada.
Canadian Prime Minister Justin Trudeau on Wednesday said he doubted whether US President Donald Trump would carry out a threat to impose tariffs on autos, given the economic damage such a move would cause.
In domestic data, wholesale trade increased by 0.1 percent in April from March, as higher sales in the machinery, equipment and supplies subsector were largely offset by declines in the motor vehicle and parts subsector, Statistics Canada said.
Canadian inflation data for May and the April retail sales report are due out on Friday and could help guide investor expectations for an interest rate hike next month from the Bank of Canada.
Investors are betting that Bank of Canada interest rate hikes will peak before they reach the central bank’s estimate of neutral, as rising trade tensions and high domestic debt loads threaten to slow the growth of the country’s economy.
Canadian government bond prices were higher across the yield curve, with the two years up 4.5 Canadian cents to yield 1.824 percent and the 10-year rising 34 Canadian cents to yield 2.146 percent.
The 10-year yield touched its lowest since April 11 at 2.144 percent.
Source: Brecorder
