TORONTO: The Canadian dollar weakened against its US counterpart on Thursday, weighed down by weakness in the price of crude oil and by healthy US retail sales which boosted the greenback.
Oil fell towards $64 a barrel, within sight of a five-year low, pressured by signs that already ample supply will be even more plentiful in 2015.
Meanwhile, US consumer spending advanced at a brisk clip in November as lower gasoline prices gave the holiday shopping season a boost, offering the latest sign of underlying momentum in the US economy.
"The (US) dollar is healthy, firmer on the decent retail sales data which looks like it's adding up to a solid consumer performance in Q4," said Adam Cole, global head of foreign exchange strategy at Royal Bank of Canada. "And then Canada is being hit specifically on the weakness in oil prices again."
The Canadian dollar was at C$1.1533 to the greenback, or 86.71 US cents, weaker than Wednesday's close of C$1.1480, or 87.11 US cents. That is its weakest level since July 2009.
RBC's Cole said the outlook for the Canadian currency would only get worse if crude continues its slide.
"With crude prices at fairly critical levels for the viability for a lot of the production in Canada, if anything the sensitivity to crude prices increases the more prices fall," he said. "The lower it goes, the more it matters for Canada and the Canadian currency."
Canadian government bond prices were lower across the maturity curve, with the two-year down 1.5 Canadian cents to yield 1.005 percent and the benchmark 10-year down 15 Canadian cents to yield 1.847 percent.
Comments
Comments are closed for this article.