Tuesday, August 9

Canadian dollar weakens as GDP undershoots expectations


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TORONTO — The Canadian dollar weakened

against its broadly stronger US counterpart on Friday as oil

prices fell and domestic data showed that economic growth likely

flatlined in September.

The loonie was trading 0.4% lower at 1.2389 to the

greenback, or 80.72 US cents. The currency traded in a range

of 1.2329 to 1.2392 and was on track to dip 0.2% for the week.

A preliminary estimate from Statistics Canada showed that

GDP was unchanged in September following a weaker-than-expected

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gain of 0.4% in August. Economists had expected a gain of 0.7%.

Third-quarter annualized GDP likely rose 1.9%, Statistics

Canada said. That would be much less than the Bank of Canada

forecast at a policy announcement on Wednesday.

The central bank’s surprise warning about an early interest

rate lift-off could douse a housing boom fueled by cheap debt.

The price of oil, one of Canada’s major exports, fell as

rising US inventories and the prospect of more Iranian exports

countered expectations that OPEC and its allies will keep supply

tight.

US crude prices declined 1.3% to $81.77 a barrel,

while the US dollar gained ground against a basket of major

currencies as the European Central Bank’s dovish tone at a

policy meeting on Thursday weighed on the euro.

Canadian government bond yields were higher across the

curve, tracking the move in US Treasuries.

The 10-year was up 1.4 basis points at 1.687%,

after touching on Thursday its highest intraday level since

December 2019 at 1.729%.

(Reporting by Fergal Smith; Editing by Andrea Ricci)



financialpost.com