TORONTO: The Canadian dollar weakened against the US currency on Friday as domestic economic growth data disappointed and a fall in US consumer spending pointed to troubles ahead in Canada's biggest export market.
The Canadian economy grew at a weaker-than-expected 0.6 percent annual rate in the third quarter, data showed, as exports fell at the fastest pace in more than three years, business investment sputtered and the housing market cooled.
That growth rate contrasts with the 2.7 percent rate notched in the United States, and was below the 0.9 percent forecast for Canada in a Reuters poll.
The soft number adds to pressure on Canada's central bank to retract its stance that interest rates will need to be raised.
"I think the biggest market impact is that it's likely to have the Bank of Canada sound slightly more cautious, and that's also putting downward pressure on the Canadian dollar," said Camilla Sutton, chief currency strategist at Scotiabank.
The central bank is due to issue a monetary policy decision next Tuesday, with no forecaster polled by Reuters expecting a rate move.
Meanwhile, a fall in US consumer spending in October pointed to Canada's biggest trading partner also recording slower growth in the current quarter.
It was the first fall in five months, though Superstorm Sandy was cited as a factor in choking off car sales and work interruptions.
At 9:23 a.m. (1423 GMT) the Canadian currency, acutely sensitive to signs of stagnation in the global economy, was trading at C$0.9940 to the greenback, or $1.0060, compared with C$0.9928, or $1.0073, at Thursday's North American close.
It hit a session low of C$0.9954 immediately after the GDP data was released, compared to C$0.9945 just prior, but is on track for a slight gain overall this week.
Government debt prices extended gains after the GDP release.
The two-year bond was up 2.5 Canadian cents to yield 1.067 percent, while the benchmark 10-year bond rose 16 Canadian cents to yield 1.692 percent.
Comments
Comments are closed.