Connect with us

Economy

Canadian dollar fells to 6-day low, backing off key 1.20 threshold

Published

 on

Canadian dollar

The Canadian dollar fell on Wednesday for a second day against its broadly stronger U.S. counterpart, with some investors possibly unwinding bullish positions in the Canadian currency when it failed to breach a key level.

The loonie was trading 0.5% lower at 1.2117 to the greenback, or 82.53 U.S. cents, having hit its weakest since last Thursday at 1.2124.

“Broad-based USD strength and CAD weakness on the crosses” helped push USD-CAD above the 1.2100 level, said George Davis, chief technical strategist at RBC Capital Markets, referring to the loonie’s underperformance against some other G10 currencies as well as the greenback.

It lost ground against the New Zealand dollar in particular after the Reserve Bank of New Zealand surprised markets by hinting at higher interest rates next year.

The Bank of Canada has already signaled more hawkish guidance on the outlook for interest rates, which was one factor helping the loonie notch a six-year high last week at 1.2013.

“Participants have been waiting to see how the pair (USD-CAD) trades around the psychological 1.2000 level, but with prices unable to push below here recently some short covering flows may be starting to appear,” Davis said.

The Bank of Canada is thinking in more concrete terms about how its digital currency might look and work but it does not currently see a strong case for issuing one, Deputy Governor Timothy Lane said.

Oil, one of Canada‘s major exports, settled 0.2% higher at $66.21 a barrel as a drop in U.S. crude stockpiles reinforced expectations of improving demand ahead of the peak summer driving season.

Canadian bond yields were mixed across the curve. The 10-year hit its lowest level since April 15 at 1.444% before rebounding to 1.453%, down less than one basis point on the day.

 

(Reporting by Fergal Smith; Editing by Bernadette Baum and David Gregorio)

Economy

Canadian retail sales slide in April, May as COVID-19 shutdown bites

Published

 on

december retail sales

Canadian retail sales plunged in April and May, as shops and other businesses were shuttered amid a third wave of COVID-19 infections, Statistics Canada data showed on Wednesday.

Retail trade fell 5.7% in April, the sharpest decline in a year, missing analyst forecasts of a 5.0% drop. In a preliminary estimate, Statscan said May retail sales likely fell by 3.2% as store closures dragged on.

“April showers brought no May flowers for Canadian retailers this year,” Royce Mendes, senior economist at CIBC Capital Markets, said in a note.

Statscan said that 5.0% of retailers were closed at some point in April. The average length of the closure was one day, it said, citing respondent feedback.

Sales decreased in nine of the 11 subsectors, while core sales, which exclude gasoline stations and motor vehicles, were down 7.6% in April.

Clothing and accessory store sales fell 28.6%, with sales at building material and garden equipment stores falling for the first time in nine months, by 10.4%.

“These results continue to suggest that the Bank of Canada is too optimistic on the growth outlook for the second quarter, even if there is a solid rebound occurring now in June,” Mendes said.

The central bank said in April that it expects Canada’s economy to grow 6.5% in 2021 and signaled interest rates could begin to rise in the second half of 2022.

The Canadian dollar held on to earlier gains after the data, trading up 0.3% at 1.2271 to the greenback, or 81.49 U.S. cents.

(Reporting by Julie Gordon in Ottawa, additional reporting by Fergal Smith in Toronto, editing by Alexander Smith)

Continue Reading

Economy

Canadian dollar notches a 6-day high

Published

 on

Canadian dollar

The Canadian dollar strengthened for a third day against its U.S. counterpart on Wednesday, as oil prices rose and Federal Reserve Chair Jerome Powell reassured markets that the central bank is not rushing to hike rates.

Markets were rattled last week when the Fed shifted to more hawkish guidance. But Powell on Tuesday said the economic recovery required more time before any tapering of stimulus and higher borrowing costs are appropriate, helping Wall Street recoup last week’s decline.

Canada is a major producer of commodities, including oil, so its economy is highly geared to the economic cycle.

Brent crude rose above $75 a barrel, reaching its highest since late 2018, after an industry report on U.S. crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.

The Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 U.S. cents, after touching its strongest level since last Thursday at 1.2265.

The currency also gained ground on Monday and Tuesday, clawing back some of its decline from last week.

Canadian retail sales fell by 5.7% in April from March as provincial governments put in place restrictions to tackle a third wave of the COVID-19 pandemic, Statistics Canada said. A flash estimate showed sales down 3.2% in May.

Still, the Bank of Canada expects consumer spending to lead a strong rebound in the domestic economy as vaccinations climb and containment measures ease.

Canadian government bond yields were mixed across a steeper curve, with the 10-year up nearly 1 basis point at 1.416%. Last Friday, it touched a 3-1/2-month low at 1.364%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

Continue Reading

Economy

Toronto Stock Exchange higher at open as energy stocks gain

Published

 on

Toronto Stock Exchange edged higher at open on Wednesday as heavyweight energy stocks advanced, while data showing a plunge in domestic retail sales in April and May capped the gains.

* At 9:30 a.m. ET (13:30 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 16.77 points, or 0.08%, at 20,217.42.

(Reporting by Amal S in Bengaluru; Editing by Sriraj Kalluvila)

Continue Reading

Trending